analysis. The Colloquium bolsters the capacity of those best placed to ensure truly sustainable, long-term benefits .... WIPO and the WTO both host numerous meetings every year, in Geneva and in many locations elsewhere, and ...... 2010/e-commerce/summary_report_en.pdf> accessed 29 ..... Wordpress, 'Hall of Shame'.
WIPO-WTO COLLOQUIUM PAPERS RESEARCH PAPERS FROM THE WIPO-WTO COLLOQUIUM 2014 FOR TEACHERS OF INTELLECTUAL PROPERTY LAW 2014
WIPO-WTO COLLOQUIUM PAPERS
RESEARCH PAPERS FROM THE 2014 WIPO-WTO COLLOQUIUM FOR TEACHERS OF INTELLECTUAL PROPERTY LAW
Compiled by the WIPO Academy and the WTO Intellectual Property Division
DISCLAIMER
The views and opinions expressed in the collection of papers from the WIPO-WTO Colloquium of Teachers of Intellectual Property (2014) are those of the authors. They do not necessarily reflect the positions of the organizations cooperating on this project. In particular, no views or legal analysis included in these papers should be attributed to WIPO or the WTO, or to their respective Secretariats.
http://www.wto.org/index.htm© 2015. Copyright in this compilation is jointly owned by the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO). The contributing authors retain copyright in their individual works.
ISBN 978-92-870-4066-4
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EDITOR Jonathan Hoffmann Brittany Burnham (Assistant editor) Sarah Hoffmann (Assistant editor) Karla Brepsant (copy-editor) EDITORIAL BOARD
Mr Frederick M. Abbott Professor College of Law Florida State University United States of America
Ms Tana Pistorius Professor of Intellectual Property Law Department of Mercantile Law University of South Africa South Africa
Mr Denis Borges Barbosa Professor of Intellectual Property Law Head of Academic Division Catholic University of Rio de Janeiro and Rio Grande do Sul Brazil
Mr Daniel J. Gervais Professor FedEx Research Professor of Law Co-Director of Vanderbilt Intellectual Property Programme Vanderbilt Law School United States of America
Mr Carlos Correa Professor and Director The Centre for Interdisciplinary Studies on Industrial Property and Economics Law University of Buenos Aires Argentina
Dr Shamnad Basheer Founder and Managing Trustee, IDIA Bangalore Karnataka 560025 India
Mr Antony Taubman Director Intellectual Property Division World Trade Organization Switzerland
Mr Sherif Saadallah Executive Director WIPO Academy World Intellectual Property Organization Switzerland
Mrs Jayashree Watal Counsellor Intellectual Property Division World Trade Organization Switzerland
Mr Marcelo Di Pietro Director WIPO Academy World Intellectual Property Organization Switzerland
Mrs Xiaoping Wu Counsellor Intellectual Property Division World Trade Organization Switzerland
Ms Martha Chikowore Training Officer WIPO Academy World Intellectual Property Organization Switzerland
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FOREWORD
Mr Francis Gurry
Mr Roberto Azevêdo
This volume is the fifth in a series of annual publications from the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO). Prepared by the WIPO-WTO Colloquium for Teachers of Intellectual Property, this collection of academic papers represents an important contribution to international scholarship in the field of intellectual property (IP). Today we witness ever increasing, more diverse forms of international interaction on IP, yet equally we see growing attention to differing national policy needs and social and developmental priorities in this field. The Colloquium Papers series highlights the importance of fostering scholarship in emerging IP jurisdictions, harvesting the insights from policy and academic debates from across the globe, and promoting mutual learning through the sharing of research and scholarship on a broader geographical base. For over a decade, the annual WIPO-WTO Colloquium itself has played a central role in the joint capacity building programmes of WIPO and the WTO. This cooperation seeks to enrich dialogue on IP issues and to address the developmental and wider policy considerations that form an integral part of IP law and policy today. The Colloquium responds to the recognition that developmental benefits from the IP system can only be reaped through skilled adaptation to national circumstances and judicious use by informed practitioners. Equally, effective policy development at the national level needs increasingly to draw upon skilled, informed and sophisticated policy analysis. The Colloquium bolsters the capacity of those best placed to ensure truly sustainable, long-term benefits from the adept use of the IP system – those who teach the IP practitioners of the future, and those who conduct research on IP law and policy. The programme has produced more than 260 alumni. This is a diverse and active network of highly engaged teachers and researchers, which reaches across the developing world. Whilst this network is the principal focus of the programme, it also includes a number of developed countries. It is heartening to see the contributions of these scholars in many avenues – through their academic publications, through their active participation in national and international policy debates, through their own teaching and through their contribution to capacity building in the developing world. We see the Colloquium Papers – an edited, peer-reviewed academic journal – as epitomizing the trend towards more diverse and yet more rigorous capacity building in IP law and policy. The five publications issued since 2010 draw together the participants' original insights into current IP issues in their countries, and give greater substance to the network of mutual learning and intellectual exchanges that characterize the Colloquium programme. The latest publication, a selection of papers from the 2014 Colloquium, covers an impressive range of IP subject matter, including patents, copyright and trademarks. The papers discuss policy issues, including IP protection of traditional knowledge and biodiversity, and IP and public health, all of which are vital to the development of IP systems in developing countries. This publication series may now be presented as a significant academic journal with unique coverage of IP law and policy focussed on emerging IP jurisdictions. In today's changing global economy, IP significantly influences the everyday lives of all citizens around the world. An international IP system that can adjust to the shifting global economic landscape, while also stimulating innovation and furthering development, demands the understanding, participation and cooperation of all peoples across the societal spectrum. Initiatives such as the Colloquium play an important role in building capacity, raising awareness, and engaging all societies that are affected by the evolution of the international IP system.
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We congratulate the contributing scholars for their first rate research, and we thank the Editorial Board – a highly distinguished group of senior IP scholars – for their invaluable support and engagement, which has helped establish the Papers as a credible academic publication. We should also record our appreciation for the work of our colleagues in the WIPO Academy and the WTO IP Division in organizing the Colloquium and facilitating the publication. Finally, we commend the Colloquium Papers as an important source for academic research to what we trust will be a wide and ever more diverse readership.
Roberto Azevêdo Director-General World Trade Organization
Francis Gurry Director General World Intellectual Property Organization
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PREFACE This volume is the fifth in the series of academic papers resulting from the WIPO-WTO Colloquium: it serves as a tangible reminder of the vitality and richness of collaboration between the two organizations as they mark 20 years of cooperation following the conclusion of a bilateral agreement in 1995, shortly after the WTO was established. The content of this journal, representing emerging scholarship from across the developing world, encapsulates much that is challenging, significant and fascinating in the field of intellectual property (IP) today, and underscores why this bilateral cooperation is as valuable as ever. Always with a strong international dimension, the IP system is undergoing an unprecedented phase of globalization and a building of international institutions, bringing with it a deepened understanding of the centrality of a balanced and effective IP system in economic and social development. Yet this same period has precipitated an intensive, wide-ranging process of inquiry about how to adapt and apply IP principles to ensure economic growth, sound public policy, and sustainable development in diverse settings across the globe, recognizing the diversity of economic, social and technological settings, national developmental priorities, and legal and commercial systems. Intellectual property is seemingly ubiquitous in contemporary life, but its role and impact are both highly diverse and in need of careful analysis and informed debate. An IP dimension is present in many challenging public policy issues today. For instance, we see growing attention to its role in promoting public health, addressing climate change, and achieving food security, as well as its interaction with human rights and social and economic development. Intellectual property has been the subject of complex, multifaceted debates at the multilateral, regional and national levels over the rights of indigenous people, the conservation of biodiversity, the ethics and use of genetic resources, Internet governance, climate change technology, and access to education and medicine. And behind these debates lies an essential question: how to come to grips with the significant responsibility of IP systems in the current world economy, in international trade, and in national policy environment: how should IP systems be designed or adapted to promote economic development, stimulate innovation, and disseminate knowledge in a manner that balances the rights of all stakeholders? The contemporary field of IP is therefore characterized by profound and searching debates on questions of essential public policy; an approach to policy-making that emphasizes empirical research, theoretical clarity, and achieves coherence with other areas of law; and the harvesting of practical experience from an ever widening base of national IP systems and participants in the policy and practice of IP. It is, therefore, a field in need of a deeper and wider research effort; sophisticated, informed and carefully tailored approaches to education and practical capacity building; and, above all, dialogue and debate founded on a richer base of information, theoretical understanding, practical experience, and knowledge of its implications in other areas of law and policy. Both WIPO and the WTO have been called upon to play a role in strengthening capacity to deal with the intellectual challenges of these policy debates. This increasing diversity of demand for capacity-building support has had a profound impact on programme design and delivery. The WIPO Academy has developed a wide range of specialist courses and training activities to respond to this evolving pattern of demand, and to reach out to and support an ever widening range of stakeholders. The WTO IP Division continues to broaden and tailor its technical cooperation and policy support activities, developing a wider engagement with current international issues and with a broader base of stakeholders, exemplified by work on public health issues. But none of these outcomes can be possible without partnerships – the sharing of ideas, pooling of resources, and coordination of practical activities – so that the necessary wide range of experience and expertise can be drawn on to meet diverse needs. Both the WIPO Academy and the WTO Intellectual Property Division therefore enjoy many valuable partnerships as a central strategy in ensuring programme delivery. The Colloquium has exemplified and promoted current trends in technical assistance and capacity building: it builds upon and extends an existing partnership between WIPO and the WTO; it responds to the need for stronger, broader dialogue and a greater involvement of voices from all perspectives in contemporary debates; it recognizes the central role of indigenous capacity building and of the key contribution of IP teachers and researchers as the mainstay of sustainable development of the necessary IP expertise in developing countries; it transcends traditional boundaries between regions and between 'north' and 'south' to allow fruitful discourse on the future of IP systems. Most importantly, it recognizes the importance of extending beyond an educational function to one of bringing together a diverse group with the aim of reviving and refreshing dialogues on IP and its cognate fields.
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The Colloquium has, in particular, laid emphasis on the role of participants as active players, as informed, stimulating teachers and researchers who bring to the two-week dialogue as much as they take away from it. Past feedback from participants stressed the need to capture, in more permanent form, the many insights gleaned from these few days of intensive, vigorous discussion. Participating teachers and researchers expressed important new ideas and insights to global debates that could enrich and inform the exchange among policymakers, the academic community, and the public at large. These thoughts, guided very much by the participating teachers and researchers themselves, are what gave rise to the present publication, which is in a way a tribute to the intellectual energy and curiosity of the many alumni of the past Colloquia, with whom we continue to enjoy a range of partnerships and dialogue. WIPO and the WTO both host numerous meetings every year, in Geneva and in many locations elsewhere, and under numerous headings: committees, seminars, workshops, roundtables, symposia, and so on. But amidst all this activity, the idea of a 'colloquium' has a special ring to it – for the WIPO-WTO Colloquium, it connotes a spirit of academic enquiry, a search for new ideas and new ways of analysing IP and related fields, through open debate, rigorous research, and new ways of communicating the complexities of IP law, practice and policy. We trust that this publication will bring to a wider community of researchers, policymakers and teachers some of the colloquium spirit that we have valued so much in this unique programme. All of us who have participated in the Colloquium have benefited from the hard work and dedication of many colleagues within WIPO and the WTO Secretariat – notably, the WIPO Academy and the WTO Intellectual Property Division. All have contributed valuably to the design and delivery of this programme, and their spirit of collegiality makes a demanding programme also a pleasurable one. We owe a particular debt of gratitude to the Editorial Board and the editors of the Colloquium Papers: they have been indispensable in ensuring that the Papers can be used as a trusted, academically sound and readable source of cutting edge IP scholarship from an impressive group of emerging scholars from across the developing world. Finally, we record our deep appreciation for the contributions made by individual scholars to this, and the preceding, volumes – we have come to know and respect their contributions to policy and legal scholarship, and we are sure that this active, informed and thoughtful participation in many of the key public policy debates of today will continue, exemplifying the important public service role performed by the scholarly community today.
Mr Sherif Saadallah Executive Director WIPO Academy World Intellectual Property Organization
Antony Taubman Director Intellectual Property Division World Trade Organization
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ACKNOWLEDGEMENTS
Thanks are extended to the staff of the WIPO Academy and the WTO Intellectual Property Division for their strong support for the project; and in particular to Jonathan Hoffmann (editor) and Karla Brepsant (copy-editor) for conducting the editorial work; to Martha Chikowore and Xiaoping Wu for their work in organizing the 2010, 2011, 2012, 2013 and 2014 Colloquiums and coordinating this publication. Gao Hang and Jayashree Watal played a key role in the conception and development of the Colloquium initiative. We extend strong appreciation to all for their contributions, and to many other colleagues not mentioned here, who have done so much to make the Colloquium initiative a success.
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CONTENTS
1 INTERACTION BETWEEN PATENT PROTECTION AND ACCESS TO ESSENTIAL MEDICINES - THE POTENTIAL CONFLICT BETWEEN RIGHTS TO HEALTH AND PROPERTY RIGHTS Dr Gustavo Schötz ............................................................................................................................................................. 1 2 DEFICIENCIES OF EXISTING SYSTEMS FOR THE TAKEDOWN OF COPYRIGHT INFRINGING CONTENT HOSTED ON THE INTERNET IN BOSNIA AND HERZEGOVINA AND PROPOSED SOLULTION Haris Hasić ...................................................................................................................................................................... 11 3 PROTECTION AND REGULATION OF HIGHLY RENOWNED TRADEMARKS - A BRIEF OVERVIEW OF RECENT DEVELOPMENTS IN BRAZILIAN TRADEMARK LAW Dr Enzo Baiocchi .............................................................................................................................................................. 23 4 THE THIRD REVISION OF CHINESE TRADEMARK LAW AND ITS IMPACT ON FOREIGN COMPANIES Dr Zhang Weijun.............................................................................................................................................................. 31 5 PROTECTION OF TRADITIONAL KNOWLEDGE AND BIODIVERSITY THROUGH A HIGHER PROTECTION OF GEOGRAPHICAL INDICATIONS: A REVIEW OF COLOMBIA'S POSITION AT THE WTO Dr Carolina Vásquez-Arango ............................................................................................................................................ 47 6 PROTECTION OF TRADITIONAL KNOWLEDGE RELATED TO BIOLOGICAL AND GENETIC RESOURCES: EXAMINING THE ACCESS AND BENEFIT-SHARING REGIME IN ETHIOPIA Dr Biruk Haile .................................................................................................................................................................. 57 7 THE ISSUE OF WORKING OF PATENTS AND ITS IMPLICATIONS FOR DOMESTIC TRADE, ECONOMIC DEVELOPMENT AND TECHNOLOGY TRANSFER Dr Prabuddha Ganguli ..................................................................................................................................................... 67 8. PROTECTION OF TRADITIONAL KNOWLEDGE AND TRADITIONAL CULTURAL EXPRESSIONS IN KENYA Dr Marisella Ouma .......................................................................................................................................................... 77 9 INTELLECTUAL PROPERTY RIGHTS AND PUBLIC HEALTH: THE CONSTITUTION AND PRACTICE IN MALAWI Dr Zolomphi Nkowani ...................................................................................................................................................... 85 10. THE IMPLICATIONS FOR MOROCCO OF THE 2013 MARRAKESH TREATY TO FACILITATE ACCESS TO PUBLISHED WORKS FOR PERSONS WHO ARE BLIND, VISUALLY IMPAIRED OR OTHERWISE PRINT DISABLED Khalid Chaouch.............................................................................................................................................................. 105 11. POOLED PROCUREMENT AS A PANACEA FOR ACCESS TO MEDICINES IN THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY REGION Dr Amos Saurombe........................................................................................................................................................ 113 12 IMPROVEMENTS IN THE PROTECTION OF TRADITIONAL KNOWLEDGE IN AMAZONIAN COUNTRIES Dr Zulay Poggi Gonzalez ................................................................................................................................................. 125
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harmonization of rights that is very close to the principle of proportionality.
1
INTERACTION BETWEEN PATENT PROTECTION AND ACCESS TO ESSENTIAL MEDICINES - THE POTENTIAL CONFLICT BETWEEN RIGHTS TO HEALTH AND PROPERTY RIGHTS
The issue is part of a more extensive debate. For many years in the academic world there have been strong adherents in favour of the coexistence of intellectual property and human rights.2 Two perspectives have existed side by side: on the one hand, some academics advocate a conflicting coexistence, which emphasizes the negative impacts of intellectual property on rights such as freedom of speech, health, safety or education; on the other hand, others are proponents of a model that establishes an equilibrium or synchronized coexistence between both types of rights. In my view, the latter perspective will gain more relevance in the coming years.
Dr Gustavo Schötz∗ ABSTRACT In many human rights treaties and national constitutions, health and property rights are considered fundamental rights. As a manifestation of such rights, access to essential medicines must be taken into consideration, along with the right of the patentee who generated them. As there is no express hierarchy of such rights, it is necessary to seek to harmonize them with the aim of achieving two objectives: (1) health protection; and (2) new and better medicines for the treatment of diseases. This article will analyse several approaches pursued in different jurisdictions and recommend the best approach for achieving these objectives. Among possible solutions, it will adhere to the 'essential content of rights'.
Far from formulating a complete conclusion, the analysis in this article must be supplemented with additional issues related to this subject, such as the effectiveness of the patents system as an instrument of innovation, the political and economic management and distribution of expenses in those countries that require such medicines, the global allocation of funds in science and technology, and the functioning of the sanitary system as a whole. Additionally, particular consideration must be given to the cost-effectiveness ratio of treatments, the interaction between innovation, intellectual property, and sanitary regulation, and the effectiveness of local and international court systems. Any change in the above elements or subsystems will have a bearing on the solution to either the problem as a whole or a specific case, respectively.
Keywords: Patents, essential medicines, compulsory licence, principle of proportionality, and rule of law I.
INTRODUCTION
The issue to be addressed in this article is complex. The intention is to provide grounds for a fair and balanced solution to the potential conflict which may arise from the interaction between patents and 1 access to essential medicines. This article seeks to demarcate the content of each of those rights, highlight the circumstances under which a conflict may arise, and address the proportionality judgment as a proposed solution. It briefly structures the main premises and conclusions and considers the Brazil case in further detail. Ultimately, it advocates
Then, when reflecting on a specific instance, a resolution system of the apparent dispute must be applied. The author of this article stresses the idea of 'apparent' as he asserts that rights are inherently complementary or collaborative among themselves. The reasonableness analysis is the best system to achieve a harmonization of rights. Far from a theoretical or abstract proposal, the factual assumption must be analysed. These are the grounds upon which a specific case should be approached, such as the compulsory licence for Efavirenz, which was ordered by the Brazilian Government.
∗
Dr Gustavo Juan Schötz (Argentina). Lawyer (Universidad Nacional de Buenos Aires, 1987); he earned his Master's degree in International Marketing from the Universidad Nacional de La Plata in 1997 and his Doctor of Law (PhD) degree from the Universidad Austral in 2011. He is Associate Professor, Level II at Universidad Austral, Argentina and teaches Intellectual Property, International Private Law and Civil and Commercial Contracts courses. Former Executive Director of the Centre of Intellectual Property and Academic Director of the Master in Intellectual Property at Universidad Austral. OMPI Consultant for the creation of the Academy of Intellectual Property of Colombia.
II.
SETTING OUT THE PROBLEM - PREMISES AND KEY FACTORS
The following are some basic premises upon which this article relies:
1
Frederick M Abbot, 'Intellectual Property and Public Health: Meeting the Challenge of Sustainability' (2011) Global Health Programme, Working Paper n 7 (The Graduate Institute, Geneva, Global Health Programme) 7; Alyna C Smith, 'Intellectual Property Rights and the Right to Health: Considering the Case of Access to Medicines' in Christian Lenk, Nils Hoppe and Roberto Andorno (eds), Ethics and Law of Intellectual Property. Current Problems in Politics, Science and Technology (Ashgate 2009) 47 at 62.
2
Willem Grosheide, Intellectual Property and Human Rights. A Paradox (CIER-Edward Elgar Publishing Limited 2010).
1
Gustavo Schötz, Interaction between Patent Protection and Access to Essential Medicines - The Potential Conflict between Rights to Health and Property _____________________________________________________________________________________ governments, and manufacturers of generic drugs.6 The premises to be verified in that regard are:
(a) Health and life are fundamental rights entrenched in constitutions and international human rights treaties.3
(a) It can be established that both the health and creativity of all members of the community are basic human goods, in the sense that all members can have their own stake in them, with no regard to the extent to which those goods are used and enjoyed individually, regardless of their actual concrete existence here and now.7
(b) Intellectual property has been recognized in international instruments and is also included in fundamental rights and guarantees. In some cases, recognition is specific and in others it is achieved by integrating property or estates. (c) Occasionally, these two rights seem to be incompatible and there appears to be potential conflict between health and medical patents, whenever the availability of some medicine should be scarce due to an exclusive right or an extremely high price, thus rendering that medicine unaffordable.
(b) Human goods, as desirable values and grounded on the human condition, give rise to 8 natural rights. (c) Members of the community have common shared interests. Thus, in both a national and international community, we believe that all members are entitled to life and health. That is why the common good will always be the driving force of any community, and the community as a whole will have its own common good.9
(d) A solution-oriented method or system should be established by taking into consideration that the potential conflict between fundamental rights will be equally present in other ambits, aside from intellectual property rights.4
(d) In order to move on from this level of generality to operative conclusions, the relations, aims and property of that community, in particular, must be detailed.
(e) A generic solution method should be established in national and international environments by considering that the potential conflict is equally present in other areas of intellectual property rights: copyright and the right to education, intellectual property rights and freedom of speech, patents and farmers' rights, freedom of speech and trademarks, copyright and consumers' rights, etc.5
(e) In the case under analysis, it is possible to note that there is an international community of patients and inventors in need of each other. 6
Holger Hestermeyer, Human Rights and the WTO – The Case of Patents and Access to Medicines (Oxford University Press 2007). Common good can be sustained beyond conflicts of interests among the parties involved. As stated by Abbot, 'There is an inherent logic in the position of the OECD governments and originator companies, and there is a reasonable justification for developing countries and their local industries to oppose that logic. The consequence is a continuing struggle for an equilibrium point at which the originator multinational companies are earning an adequate return on investment, while developing countries have access to medicines at prices that are reasonably affordable.' Frederick M Abbot, 'Intellectual Property and Public Health – Meeting the Challenge of Sustainability 14. 7 John Finnis, Natural Law and Natural Rights (Clarendon Press Oxford 1980) Chs 1-2. 8 Javier Hervada, Introducción crítica al derecho natural (Universidad de Piura 1ª Ed Peruana 1999). 9 The common good of a community, in particular, is outlined in TRIPS Article 7: The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.
(f) Consequently, the method or system could be similar to that utilized to resolve other conflicts between fundamental rights. In keeping with this simplified reasoning, it is also worth noting the existence of a common good pertaining to the international community consisting of patients, medical doctors, sanitary agents, not-forprofit organizations, inventors and researchers,
3
The terms 'fundamental rights', 'constitutional guarantees' or 'human rights' are not equivalents. They are to be distinguished based on the theoretical background supporting them, their field of application, and their effectiveness. However, I will refer to them interchangeably in this paper. 4 Virgilio Afonso da Silva, 'Comparing the Incommensurable: Constitutional Principles, Balancing and Rational Decision' (2011) Vol 31 n 2 OJLS 273, 274. 5 Jakob Cornides, 'Human Rights and Intellectual Property – Conflict or Convergence?' (2004), Journal of World Intellectual Property 7.2, 135.
2
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ The following, therefore, contain some general propositions that will both activate consensus and serve as a starting point to seek a solution for the potential conflict:
impose duties, there needs to be a mechanism to remedy such a defect or omission in the legal regime. Therefore, Article 8 from the TRIPS Agreement stipulates the following:
(a) A patient's health through access to medicines is a positive thing that is suitable for every human being. (b)
Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.
Access to medicines must be prioritized.
(c) Diseases or death that may be attributed to limited access to required medicines must be avoided. (d) The supply of medicine to a patient in need is a valuable action.
However, the wording of the Article does not allow inferring what those necessary measurements are or what is compatible with the TRIPS Agreement.
(e) The search for new and better medicines must be promoted.
The same applies to paragraph (1) of Section 25 of the Universal Declaration of Human Rights:
(f) Those who benefit society with better medicines, through their effort or investment, deserve an award.
Everyone has the right to a standard of living adequate for the health and wellbeing of himself and of his family, including food, clothing, housing and medical care and necessary social services.
(g) Those who have invested time, effort and capital to obtain new property cannot be deprived of such property without fair compensation. Broadly speaking, it could be asserted that there are no clashes, but rather the common good is manifested through coexisting and complementary rights. In all societies, the authority exercises distribution of common goods and assigns rights through norms, some of which are principles and others are rules. The former are deontological judgments, lacking the required precision to command, prohibit, or allow the conduct of agents with respect to others. That is the reason why principles will then have to be established by enacting proper rules assigning specific rights to their beneficiaries, including provisions as to who has the duty to give certain objects to others or else refrain from engaging in certain conduct.
Similarly, the Constitution of the World Health Organization (WHO), enacted in 1946, stipulates the following: The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition. These principles lead to natural questions: are these rights negative or affirmative rights, that is to say, is a specific conduct required or is it aimed at preventing interferences? Against whom can these rights be enforced? Are there affirmative conducts demanded, and if so, what are they?
Consequently, rights must be enunciated by specifying three concepts: an obligee, a beneficiary, and the action that must be undertaken, prohibited, or allowed.10 To understand the full right to health or how the right to patents is made effective, the provisions of international treaties or national laws are to be observed. If there is no consistency between enunciations and normative purposes, or in the absence of regulations that attribute rights or
In order to address these questions, some key notions must be established. First, it must be made clear that the State is the first passive subject in the obligation derived from right to health. As the patient is a member of a community, the community must ensure the right to life and health of each and all of its members. It is only indirectly that such an obligation affects individuals, either arising out of a contract with the patient (social security), or from a
10
This is the overall conception of Hohfeld's rights. WN Hohfeld, Fundamental Legal Conceptions (New Haven 1919).
3
Gustavo Schötz, Interaction between Patent Protection and Access to Essential Medicines - The Potential Conflict between Rights to Health and Property _____________________________________________________________________________________ delegation of a duty made primarily upon an organized community.11
The States Parties to the present Covenant recognize the right of everyone:
Consequently, pharmaceutical companies are not the subjects bound to fulfil the duty derived from the right to medicine. Their duty is to make medicines available in terms of quantity and quality, and to ensure that they are otherwise harmless and meet statutory requirements, which may include a duty to refrain from setting abusive prices.
(a) [t]o take part in cultural life; (b) [t]o enjoy the benefits of scientific progress and its applications; [and] (c) [t]o benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.
The right of the patent holder, as already stated, is also considered a fundamental right. In other words, the same right is asserted in Article 17 of the Universal Declaration of Human Rights:
These rights, stated in the form of principles— not rules—must be harmonized with others. In this sense, Article XIII of the American Declaration of the Rights and Duties of Man establishes:
(1) Everyone has the right to own property alone, as well as in association with others [and] (2) [n]o one shall be arbitrarily deprived of his property.
[r]ights to the [b]enefits of [c]ulture: [e]very person has the right to take part in the cultural life of the community, to enjoy the arts, and to participate in the benefits that result from intellectual progress, especially scientific discoveries.
Additionally, Article 27, paragraph (2) states: Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary, or artistic production of which he is the author.
He likewise has the right to the protection of his moral and material interests as regards his inventions or any literary, scientific or artistic works of which he is the author.'
These rights were subsequently embodied in the International Covenant on Economic, Social and Cultural Rights:
From the perspective of a patent as a proprietary right, some key aspects have to be determined. Is intellectual property a human right? Do all intellectual property rights have the same hierarchy or rank? Is the right to patent a human right? Can they be considered absolute rights, even to the detriment of other needs in society? Can a company be a holder of human rights? Are pharmaceutical companies holders of human rights?
11
Even though the existence of a global community can be considered, and even if patients can be treated as its members, such community is not bound to ensure the right to health. An ethical mandate does not entail, per se, sufficient grounds to a claim under the law. That is the reason why the main player under a duty to provide health is still the state, this being conceived as a community to which the patient belongs. With regard to the existence of a global community but with obligations at a national level, Taubman's words are particularly useful:
We can also establish that property, being in itself a right, is subjected to the restrictions imposed at the time it is granted and those derived by applicable legal rules. In my view, then, the right to property would not be affected if the patent is not granted by virtue of legislation that was duly enacted and does not result from arbitrariness. Still, a human right to property (or a fundamental guarantee) could be invoked if a patent holder is unjustly deprived of his own property or full enjoyment of that property, or, if the patent is not granted, because of an arbitrary decision.
This is because the extent to which the 'world's welfare' is influenced by international IP standards ultimately can only depend on choices and actions taken at the municipal level, under domestic laws and legal measures that apply and operationalize more abstract and remote international standards, and in so doing mediate and interpret them, in such a way that either delivers or denies the 'articulated standard of welfare.' Antony S Taubman, 'TRIPS Jurisprudence in the Balance: Between the Realist Defence of Policy Space and a Shared Utilitarian Ethic,' in Christian Lenk, Nils Hoppe and Roberto Andorno (eds), Ethics and Law of Intellectual Property. Current Problems in Politics, Science and Technology (Ashgate 2009) 117.
These premises are applied to medical patents. This is mainly because investment in research and development with a view to future returns generates an expectation to earn compensation. Undoubtedly in all legal systems such investment is property. And 4
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ this is because it is largely the way in which our global society has decided to assign resources to award innovation in medicine. Such pressures apply with more force in the scientific and industrial sectors because the market failures in the generation of information are much more evident. Rapid and easy imitation of products is not comparable to the extensive, costly, and high risk activity involved in researching new products and launching them on the market for the first time.
demarcating the material and formal aspect of each right. Then, an assessment on the facts must be undertaken, so as to determine which right is at stake in the case under analysis. This amounts to analysing each situation individually. Just like the case of the proportionality principle and the reasonableness judgment, the specific case must always be borne in mind. Thus, it will be necessary to determine at least the following elements of each right at stake:
III.
(a) For what purpose or purposes may the State suspend or else limit the right of the patent holder and the right of the owner to uncontestedly preserve their proprietary interests or receive the payment requested?
SOLUTIONS AVAILABLE
The attempt to solve the potential conflicts between fundamental rights is not new. In some countries, rights or privileged freedoms are ordered into a hierarchy. Other countries, in turn, resort to a balancing test. Some legal experts and courts favour the application of the theory of external limits.
(b) Who is the holder of each right (the clash will be between the government, which wants to favour a group of patients and the holder of the essential medicine)?
In European case law, the proportionality principle, which originated in the German Federal Court, is utilized.12 These are all methods that intend to achieve objectivity or rationality in a decision that resolves conflicting rights, values or principles. The intention is to safeguard the rule of law and the 13 principle of due process.
(c) Who must observe or enforce such right, or, who is the subject under duty to fulfil certain conducts in relation to the other subject and vice versa? (d) What are the sense, scope, and conditions for the exercise of each of those rights, including time and other circumstances and conditions for its enforcement?
Undoubtedly, this type of mechanism must be applied to the conflict to which we have referred. Some authors even consider that the so-called threestep rule test is a concrete application of the proportionality principle to the conflicts involved in 14 intellectual property rights.
(e) Under what conditions does the holder of the intellectual property right lose entitlement thereof, and what are the conditions for the lawful exercise of each of those rights through the causes of action stated in the claim?
As part of this search, the author is more in favour of the solution provided by legal experts on the essential content of rights.15 This involves, first of all,
(f) What are the powers and faculties enjoyed by the holder in case of infringement by the subject under a duty to comply with the State, and in case of breach by the government, what are the powers of the patent holder?
12
Tor-Inge Harbo, 'The Function of the Proportionality Principle in EU Law' (2010) European Law Journal Vol 16 n 2, 158. 13 Laurence R Helfer, 'The New Innovation Frontier? Intellectual Property and the European Courts of Human Rights' in Paul LC Torremans (ed) Intellectual Property and Human Rights (Kluwer Law International 2nd Edition 2008) 25. 14 Christophe Geiger, 'The Constitutional Dimension of Intellectual Property' in Paul LC Torremans (ed) Intellectual Property and Human Rights (Kluwer Law International 2nd Edition 2008) 101 at 131; see also H Grosse Ruse-Khan 'Proportionality and Balancing within the Objectives for Intellectual Property Protection' 161. 15 In this respect, see Fernando Toller, 'Resolución de los conflictos entre derechos fundamentales, una metodología de interpretación constitucional alternativa a la Jerarquización y el Balancing Test' in Eduardo Ferrer MacGregor (ed) Interpretación Constitucional Vol II (Editorial Porrúa 2005) 1199. See also Pedro Serna Bermúdez and Fernando Toller, La interpretación constitucional de los
(g) Finally, which freedoms and rights are to be enjoyed by the patent holder claiming such right?
derechos fundamentales: una alternativa a los conflictos de derechos (La Ley 2000); Juan Cianciardo, 'El ejercicio regular de los derechos: análisis y crítica del conflictivismo' (Ad-hoc 2007); Juan Cianciardo, El principio de razonabilidad: del debido proceso sustantivo al moderno juicio de proporcionalidad 2a. ed. (Ábaco 2009); Juan Cianciardo, Principio de proporcionalidad y concepto de derecho: una aproximación desde las tesis del positivismo jurídico (AdHoc 2009).
5
Gustavo Schötz, Interaction between Patent Protection and Access to Essential Medicines - The Potential Conflict between Rights to Health and Property _____________________________________________________________________________________ subsequent Declaration on the TRIPS Agreement and Public Health. This article will analyse cases in which a compulsory licence is a solution in keeping with the standards for a case in particular, as explained above.16
These questions emerge when a rule is being challenged, be it specific or hypothetical. As an illustration, a hypothetical rule could be: 'Given the scarcity of necessary doses to suit the needs of a population, and as it is a patented drug and with no therapeutical substitute, the State shall apply a compulsory licence, by allowing third party suppliers to ease the required production, thereby disregarding the patent or paying a royalty.' If that were the rule, where there is a possible factual occurrence and a legal consequence arising therefrom, the judge should consider the following:
IV.
In this final section, the author attempts to apply the concepts formerly outlined in a case of compulsory licence that occurred in Brazil. The case of compulsory licence was selected, for it consists of a device designed in such a way that the rights of the patent holder can be suspended in the event of an emergency, consistent with the needs of the population.17
(a) Does the rule have a constitutionally socially relevant purpose? (b) Is there an adequate relationship between means and the purpose sought? (c)
The relevance of this case is rooted in the peculiar situation encountered in Brazil. On the one hand, this is a country with a remarkable level of economic development and a large population. On the other, it has its own capacity for the production of medicines and a well defined position in international forums, where intellectual property is negotiated.18
Are these prescriptions necessarily required?
(d) Is there a reasonable proportion between the results and the impediments reached through such prescriptions? (e)
COMPULSORY LICENCES
During the 1980s and 1990s, several social organizations, including groups representing persons infected with HIV, based their petitions on the Constitution to claim free access to retroviral medicine. They also claimed these had to be produced by the state. As part of their claim, they
Is the essential content of the right respected?
(f) Is the content included within the reasonable functioning sphere of such right? The hypothetical rule presented is therefore precise, but drafted in an abstract sense. However, specific cases naturally go hand in hand with their own exclusive facts. The aim is to analyse a solution of justice for the event occurring here and now, and this includes adjectival circumstances and the procedures sought. The rule created herein will be contrasted systematically with the whole legal regime, including international treaties subscribed by the State, the relevant constitution, and constitutional guarantees, statutory rules, etc.
17
Nuno Pires de Carvalho has, so far, concluded that a mistake has been made in granting compulsory licences, either because of the reasons given, or because of the low compensation established or the failure to specify a beneficiary. Nuno Pires de Carvalho, The TRIPS Regime of Patent Rights 3rd Edn (Kluwer Law International 2010) 227, 425, 426. 17 Under Article 31 of the TRIPS Agreement and the Declaration on the TRIPS Agreement and Public Health, adopted on 14 November 2001. For an analysis of the background of this Declaration, as stipulated in Javier Nuñez, 'Acuerdo sobre los ADPIC y Salud Pública. Evolución de la cuestión en la Organización Mundial de Comercio y la posición asumida por la República Argentina en las negociaciones' in Gustavo Schötz (ed.), Patentes y Medicinas Esenciales (Heliasta 2013). 18 These characteristics are the main sources of concern for multinational companies, especially when the need for compulsory licences emerges. 'Despite the way this issue has been featured in the press, the drug companies are not worried about a poor country overriding patents to meet an internal public health emergency. The concern is over the potential to legalize intellectual property theft in places such as India and Brazil, where low-cost manufacturers would exploit wider latitude to produce knock-off drugs for export.' Sidney Taurel, 'The Campaign against Innovation' in Michael A Santoro and Thomas M Gorrie (eds), Ethics and the Pharmaceutical Industry (Cambridge University Press 2005), 326, 327.
Thus, the rule must make provisions for a country in particular, the precise pathology, the alternative methods, the substitute products, the functioning of the sanitary system of that specific community, the price within a contained economic system, the number of affected patients, the specific epidemic situation, etc. If justice, in its typical sense, consists of giving each his due, we must specify what we mean by 'each' i.e. who is the one that gives, and who receives? And further, what is given and received, and what is actually 'due'? One way of illustrating the application of the essential content of rights could be the case of compulsory licences granted in accordance with TRIPS Article 3 or pursuant to paragraph 6 of the 6
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ contended that compulsory licences had to be applied, if necessary, by limiting the rights of pharmaceutical companies in relation to certain products.19
provisions, at least one of the following necessary conditions for the grant of a compulsory licence would have to be met: abuse, public necessity or 21 national emergency.
Efavirenz, under the trade name Strocrin®, is an antiretroviral (ARV) drug produced by Merck, Sharp & Dohme (MSD), for the treatment of HIV, which facilitates once daily dosing. In 2003 the Ministry of Health of Brazil began negotiations with the laboratories aimed at obtaining better prices. During a specific phase of the negotiation process, the Ministry of Health of Brazil threatened to implement compulsory licences for Merck's ARV. The compulsory licence granting process was activated after the medicine was declared of public interest. MSD had a seven-day term to make a pronouncement, after which it made an offer of US$ 1.10 per pill. The offer was rejected by the government, which granted the compulsory Efavirenz licence. An initial term of five years was established, which could in turn be extended for an additional five years.
The other aspect to be considered is the time period: this must be precise and appropriate for the circumstances of a given case. Granting a compulsory licence until the termination of the patent implies depriving it of its content, as stipulated in Articles 31(a) and (c) of the TRIPS Agreement. In the case under analysis, the time period was five years, which was later extended for an additional five-year period. Besides, as the government delivered the medicine under a compulsory licence scheme to the entire population, the market for such medicine ceases to exist for the patent holder. In the reasonableness judgment, a question arises first whether the political measure of the Brazilian Government fulfilled a constitutional and socially relevant purpose. This was undoubtedly the case, as it is necessary to cater for the health of the population affected.
Royalties were fixed at 1.5 per cent over the prices to be paid by the Ministry of Health of Brazil to importers or local manufacturers. Medicines subject to compulsory licences cannot be traded, but only purchased and distributed by the Ministry of Health of Brazil for the sanitary assistance of populations infected with HIV/AIDS.20 As stipulated by such
Then, the political decision is also appropriate when it comes to the ratio between means and the purpose sought, as the purpose originally envisaged by the governor or legislator is achieved. Indeed, by achieving a reduction of prices there are more chances to achieve the universal treatment of affected patients.
19
The strategy of compulsory licences in Brazil is strengthened by the capacity that the country has to produce a generic drug, thus creating a run on the resources that poorer countries may have access to, and which exclusively depend on imports. As stated by Laurence R Hefner and Graeme W Austen in Human Rights and Intellectual Property: Mapping the Global Interface 130-131. Also in WCV Rodrigues and O Soler, 'Licença compulsória do efavirenz no Brasil em 2007: contextualização' (2009) Rev Panam Salud Publica 26(6) 553. Aspects of the political debate can be found in W Flanagan and G Whiteman, 'AIDS is Not a Business – Study in Global Corporate Responsibility – Securing Access to Low-Cost HIV Medicines' 70. 20 The Executive Order allows both local manufacturing and imports from countries with no patent protection. Those in favour of the decision considered that innovation would not be affected, since sales of developing countries only account for 11 per cent of worldwide sales of pharmaceutical companies, and Latin America only accounts for 4 per cent of such sales. It is estimated that companies will not refrain from investing due to losing part of their sales in these markets. But it is also true that Brazil represents one of the ten major countries worldwide in the field of medicines, as stated in Gabriela Costa Chaves, 'Preguntas e respostas sobre o licenciamento compulsório do medicamento Efavirenz no Brasil' (2007) Associação Brasileira Interdisciplinar de AIDS (ABIA) paragraph 12; Fernando Lopes Ferraz Elias, 'Patente de medicamento: a questão do licenciamento compulsório do Efavirenz'
21 In all cases in which a compulsory licence was granted, the parties first had to attempt to obtain a voluntary licence (Section 31 of the TRIPS Agreement). This requirement was apparently met by the Brazilian Government, which made a specific petition: the price paid by Thailand. According to Pires de Carvalho, the Brazilian Government indicated that the licence was granted by virtue of its public and non-commercial use. In truth, the requirement would have sufficed, so as to avoid preliminary negotiations (TRIPS Article 31.(b)). The Government received an offer by MSD that it approved. Pires de Carvalho, The TRIPS Regime of Patent Rights, 445. The Brazilian policy brought about significant changes in access to retrovirals. Savings are said to amount to US$400 million a year, through a reduction of prices. This information is provided by Sigrid Sterckx, 'Lack of Access to Essential Drugs: a Story of Continuing Global Failure, with Particular Attention to the Role of Patents' in Christian Lenk, Nils Hoppe and Roberto Andorno (eds), Ethics and Law of Intellectual Property - Current Problems in Politics, Science and Technology (Ashgate 2009) 175, 177.
7
Gustavo Schötz, Interaction between Patent Protection and Access to Essential Medicines - The Potential Conflict between Rights to Health and Property _____________________________________________________________________________________ Third, it must be verified whether those prescriptions are necessarily required or not, and whether those are the only method available to such an end. The answer is not so simple in this case. The state has undertaken to provide a system-wide sanitary coverage. To this end, estimates need to be made in keeping with the budget and resources available. Considering the terms under which the government sets out the requirement, there are apparently no resources for the purchase of medicines, when, in fact, the core of the argument concerns the savings obtained. The situation of Brazil seems to be totally different from that of African countries, or even the case of Thailand, a country chosen as a benchmark by the Ministry of Health of Brazil.
negative. Saving is not a sufficient motive to violate a right. Invoking necessity is simply not enough; rather, a well grounded argument process is 24 required. The fourth question that arises is whether the decision is proportionate, that is, whether there is a sound balance between the results derived from the prescription and the impediments thereby obtained. In this respect, the aim is to determine whether this is the best solution, rather than the only one. The intended purpose is assisting a universe of patients who are under the wing of the State. What is being prevented is profiting from the patent in an economic sense, except for the limited royalty earned by the compulsory licence. MSD is prevented from selling its product directly. If the government catered for the needs of all the population for free, there would be no market available, whatever the price may be.25
Ultimately, the means utilized should be the one that least undermines the rights of other players involved and is the least detrimental. This last aspect is not easy to evaluate in a litigation process. The way a government administers its resources is not subject to revision by the courts. In developing countries where there is a significant need for education, security, health, housing and the like, health expenses compete against the appropriation of resources. In poorer countries, the combination of needs and interests will be a different one. After all, priorities are not to be ascertained by judges, as the task of distribution is not inherent to them, but to the other powers of the State.22
needs. Such was the action undertaken by the Ministry of Health, when considering that the success of the anti-AIDS campaign had many advantages from the point of view of low morbidity of patients. Further, the overall outcome has been a positive economic result. As stated in the Commission on Intellectual Property Rights (CIPR), Integrating Intellectual Property Rights and Development Policy (London 2002 ˂http://www.iprcommission.org˃), 42: So, although the NSAP is expensive, the costs avoided due to reduced illness, hospitalization and other impacts of HIV/AIDS are beginning to balance the budget. The MHB estimates that in 2001, the final cost of NSAP, incorporating reduced morbidity expenditure, was negative. 24 The professional literature that usually justifies the application of a compulsory licence focusses on the lack of economic capacity to assist patients, as stated in Hestermeyer, Human Rights and the WTO – The Case of Patents and Access to Medicines, 138. That was not the case in Brazil. Comparing the prices of generic drugs with the original drugs, without considering the cost of development and without assuming the external nature of the research, is a clearly insufficient comparison and derived from a political discourse. The other aspect to be considered is the distinction between discretionary powers and arbitrariness, but that topic goes beyond the purpose of this paper. 25 In the absence of sales, the 1.5 per cent royalty is not proportionate. There is a wide gap between the usual maximum royalty for voluntary licences in this field, which is closer to 15 per cent and the government proposal. The parties could have also raised the issue of calculating the royalty. By considering the few existing cases of compulsory licences, 1.5 per cent is too low and does not meet the standard of TRIPS Article 31(h), which stipulates that the 'economic value of the authorization' must be considered. See Hestermeyer, Human Rights and the WTO – The Case of Patents and Access to Medicines, 247.
The work that is within the scope of the judge or court is to ensure that there is no infringement of a right that was originally granted. In that case, the right of a patent holder to receive compensation is contested.23 In this respect, the author's opinion is 22
The appropriation of resources is a very complex task. Budgetary allocations must be jointly conducted by the executive and judicial branches. It is not an action that, in principle, should be in the hands of the judiciary. Still, if a right has been granted, and a budgetary allocation is required for its exercise or enjoyment, a judge can step in to enforce such performance against other branches of government, either individually or collectively. Such was the holding of the Argentine Supreme Court in Hospital Británico de Buenos Aires c/ Estado Nacional (Ministerio de Salud y Acción Social). 13/03/2001. Fallos 324:754. See also 300:1282; 301:771; 251:53; 'Ramos, Marta Roxana y otros c/ Buenos Aires, Provincia de y otros s/ amparo' 12/03/2002, Fallos 325:396. 23 Although Flanagan and Whiteman state that granting the compulsory licence was due to the abuse on the part of MSD, I have not found any debate or grounds being raised by the Brazilian Government to support such a position. According to Flanagan and Whiteman in 'AIDS is Not a Business: A Study in Global Corporate Responsibility – Securing Access to Low-cost HIV Medications' (2007) in Journal of Business Ethics 73: 65, what was actually being challenged here is a 'necessary' savings to suit customers'
8
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ problem.26 As a conclusion, the author considers that, in the current state of economy of knowledge and productive and sanitary systems, patents are necessary for the better health of the population. However, it is evident that, given emergency situations, or in the absence of a market, patents can make it difficult to access medicines that derive from a system of global innovation. The absence of a market is particularly relevant in communities unable to afford those medicines, either during a specific crisis, or as a result of an endemic problem, particularly when incomes of the population to which medicines are addressed are recurrently low. The situation is more serious and its solution is not an easy one, especially when needed medicines are still being developed for diseases that currently have no cure. In the absence of a future market, the necessary investments are scarce to find a cure.
The fifth aspect to be addressed is whether the political measure respects the essential content of the right. In that case, the intellectual property of the patent holder is at stake. Although compulsory licences potentially limit the right of the holder to commence operations, a fair compensation must be awarded. Lastly, it is worth asking whether the measure is to be included within the reasonable operative sphere of such right. This refers to the right of the government to claim a given price or else allow for the manufacturing or importation by third parties that can meet this budgetary demand. The government's duty to provide free assistance to patients is not being challenged, but achieving the goals of the sanitary policy does ultimately affect the right to property. Needless to say, the state has its own discretionary margin. The problem lies in finding the limit without allowing for arbitrariness.
Compulsory licences imply a waiver to patents, at least during the persistence of a crisis. As this is a mechanism laid down in international agreements and local legislations, a solution derived from consensus can be found there, which may amount to the harmonization so vigorously intended. Although cases of application of the proportionality principle have not emerged so far, this would be the mechanism that should enable us to verify whether the compulsory licence has achieved a balance of rights in a given case. For that purpose, a case-bycase analysis must be undertaken, in order to determine whether the premises for regulation are present and whether fair compensation is provided.
Ultimately, after applying a reasonableness analysis, the author's opinion is negative. The lack of an appropriate procedure and the reduced amount of the royalty are at the core of the discussion. Even more debatable and which typically belongs to the sovereign political power of Brazil, is the allocation of resources to health, particularly AIDS drugs, against hundreds of budgetary options for the distribution of honours, rank and wealth. V.
CONCLUSION: THE THREE-STEP RULE AS A MANIFESTATION OF THE ESSENTIAL CONTENT OF RIGHTS
BIBLIOGRAPHY The proportionality test that the author applied to the Efavirenz case, is generally thought to be made up of three steps:
Abbot F, 'Intellectual Property and Public Health: Meeting the Challenge of Sustainability' Global Health Programme Working Paper no 7 (2011) (The Graduate Institute, Geneva, Global Health Programme)
(a) The adaptation of the means chosen for the accomplishment of the aims sought;
Cianciardo J, El ejercicio regular de los derechos: análisis y crítica del conflictivismo (Ad-hoc 2007)
(b) the necessity to resort to these means for achieving the goal (i.e. ensuring that there are no other means conducive to that end and which may be less detrimental to potentially affected constitutional principles; and
Cianciardo J, El principio de razonabilidad: del debido proceso sustantivo al moderno juicio de proporcionalidad 2a. ed. (Ábaco 2009)
(c) the proportionality - in a strict sense - between the means and ends and that the principle satisfied by meeting such end will not sacrifice more important constitutional principles.
Cianciardo J, Principio de proporcionalidad y concepto de derecho: una aproximación desde las tesis del positivismo jurídico (Ad-Hoc 2009) Commission on Intellectual Property Rights (CIPR), 'Integrating Intellectual Property Rights and
Both compulsory licences granted under Article 30 and other measures adopted by virtue of Article 8 of the TRIPS Agreement must be analysed as particular applications of the three-step rule or application of the proportionality judgment to the specific
26
Helfer, 'Intellectual Property and the European Court of Human Rights' 73.
9
Gustavo Schötz, Interaction between Patent Protection and Access to Essential Medicines - The Potential Conflict between Rights to Health and Property _____________________________________________________________________________________ Development Policy' (London ˂http://www.iprcommission.org˃)
2002)
Lopes Ferraz Elias F, 'Patente de medicamento: a questão do licenciamento compulsório do Efavirenz', .
Cornides J, 'Human Rights and Intellectual Property – Conflict or Convergence?' (2004), Journal of World Intellectual Property 7.2, 135
Nuñez J, 'Acuerdo sobre los ADPIC y Salud Pública. Evolución de la cuestión en la Organización Mundial de Comercio y la posición asumida por la República Argentina en las negociaciones', in Gustavo Schötz (ed), Patentes y Medicinas Esenciales (Heliasta 2013)
Costa Chaves G, 'Preguntas e respostas sobre o licenciamento compulsório do medicamento Efavirenz no Brasil' (2007) Associação Brasileira Interdisciplinar de AIDS (ABIA)
Pires de Carvalho N, The TRIPS Regime of Patent Rights 3rd Edition (Kluwer Law International 2010)
da Silva V A, 'Comparing the Incommensurable: Constitutional Principles, Balancing and Rational Decision' (2011) Vol. 31 no 2 OJLS 273
Rodrigues WCV and Soler O, 'Licença compulsória do efavirenz no Brasil em 2007: contextualização' (2009) Rev Panam Salud Publica 26(6), 553
Finnis J, Natural Law and Natural Rights (Clarendon Press, Oxford 1980)
Schötz G (ed), Patentes y Medicinas Esenciales (Heliasta 2013)
Flanagan W and Whiteman G, 'AIDS is Not a Business': A Study in Global Corporate Responsibility – Securing Access to Low-cost HIV Medications' (2007) in Journal of Business Ethics 73: 65.
Serna Bermúdez P and Toller F, La interpretación constitucional de los derechos fundamentales: una alternativa a los conflictos de derechos (La Ley 2000)
Geiger C, 'The Constitutional Dimension of Intellectual Property', in Paul LC Torremans (ed) Intellectual Property and Human Rights (Kluwer Law International 2nd Edition 2008) 101
Smith AC, 'Intellectual Property Rights and the Rigth to Health: Considering the Case of Access to Medicines', in Christian Lenk, Nils Hoppe and Roberto Andorno (eds), Ethics and Law of Intellectual Property. Current Problems in Politics, Science and Technology (Ashgate 2009) 47
Grosheide W, Intellectual Property and Human Rights - A Paradox (CIER-Edward Elgar Publishing Limited 2010)
Sterckx S, 'Lack of Access to Essential Drugs: a Story of Continuing Global Failure, with Particular Attention to the Role of Patents', in Christian Lenk, Nils Hoppe and Roberto Andorno (eds), Ethics and Law of Intellectual Property - Current Problems in Politics, Science and Technology (Ashgate 2009) 175
Grosse Ruse-Khan H, 'Proportionality and Balancing within the Objectives for Intellectual Property Protection' in Paul LC Torremans (ed) Intellectual Property and Human Rights (Kluwer Law International 2nd Edition 2008) 161 Harbo T, 'The Function of the Proportionality Principle in EU Law' (2010) European Law Journal Vol 16, n 2, 158
Taubman A, 'TRIPS Jurisprudence in the Balance: Between the Realist Defence of Policy Space and a Shared Utilitarian Ethic', in Christian Lenk, Nils Hoppe and Roberto Andorno (eds), Ethics and Law of Intellectual Property. Current Problems in Politics, Science and Technology (Ashgate 2009) 117
Helfer LR, 'The New Innovation Frontier? Intellectual Property and the European Courts of Human Rights, in Paul LC Torremans (ed) Intellectual Property and Human Rights (Kluwer Law International 2nd Edition 2008) 25
Taurel S, 'The Campaign against Innovation', in Michael A Santoro and Thomas M Gorrie (eds), Ethics and the Pharmaceutical Industry (Cambridge University Press 2005) 326
Hervada J, Introducción crítica al derecho natural (Universidad de Piura, 1ª. Ed. Peruana, 1999)
Toller F, 'Resolución de los conflictos entre derechos fundamentales, una metodología de interpretación constitucional alternativa a la Jerarquización y el Balancing Test', in Eduardo Ferrer Mac-Gregor (ed) Interpretación Constitucional Vol II (Editorial Porrúa, 2005) 1199
Hestermeyer H, Human Rights and the WTO – The Case of Patents and Access to Medicines (Oxford University Press 2007) Hohfeld W N, Fundamental Legal Conceptions (New Haven 1919)
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10
2 DEFICIENCIES OF EXISTING SYSTEMS FOR THE TAKEDOWN OF COPYRIGHT INFRINGING CONTENT HOSTED ON THE INTERNET IN BOSNIA AND HERZEGOVINA AND PROPOSED SOLUTION
Keywords: copyright infringement, Internet, hosting, notice and takedown, intermediary, Institute
Haris Hasić∗
The Internet is an ever more prominent medium of social exchange and social expression in B&H1 and in the world.2 The Internet is evolving such that posting content is easier for the average user.3 This facilitates the posting of copyright infringing content as well. At the same time, effective methods of removing infringing content from the Internet, as this article will demonstrate, do not exist, at least not in B&H.
I.
ABSTRACT The growth of the Internet increases the likelihood of copyright infringement online. Copyright holders need a quick and efficient mechanism for taking down infringing content. In Bosnia and Herzegovina (B&H) there is no such suitable mechanism. This article reviews and finds the existing B&H mechanisms deficient. The first method, petitioning the infringer, is based on voluntary cooperation by the infringer and is thus not practicable. Petitioning the courts is unsuitable because the B&H court system is complicated for the average person, overburdened with cases, unacceptably slow to process claims when time is essential, and the judges do not possess sufficient knowledge and experience in intellectual property cases. Petitioning the Internet Host Service Providers (IHSPs) is not suitable because, though ideally placed to help, the IHSPs are shielded by broad and confusing safe harbour provisions and, due to legal uncertainty, do little, which aids their customer (the infringer). This article also examines the EU and US takedown mechanisms and finds that, due to an inherent bias either toward the alleged infringer or toward the copyright holder, both are prone to uncertainty and widespread abuse. The article suggests that such abuse could be avoided by introducing a neutral intermediary. For B&H that intermediary should be the Institute for Intellectual Property of B&H. Some of the advantages of this proposed system are impartiality, legal certainty, advisory capacity and centralization, among others.
INTRODUCTION
It is incumbent on the developing nations to ensure that copyright is sufficiently protected on the Internet to stimulate the flourishing of creative expression on this medium, which can be an important part of prosperity. One instance of copyright infringing content placed on the Internet can be accessed by countless users, who, in turn, can make countless reproductions of the work in any part of the world, significantly reducing the economic value of the existing right and work. Thus, from the perspective of the right holder, the first priority must be to remove the infringing content as expeditiously as possible. Once, and only once, the infringing content is removed from the Internet can the copyright holder pursue sanctions through the existing enforcement mechanisms. As this article will demonstrate, a copyright holder in B&H does not have any such mechanism that will consistently ensure the timely taking down of copyright infringing content hosted on the Internet. The first part of the article will review what options the copyright holder does have at his or her disposal in B&H. The second part will review existing notice and takedown mechanisms in the European Union and the United States. The third part will suggest a solution by using the Institute for Intellectual Property of B&H as an intermediary in the takedown process.
∗
Mr Haris Hasić (Bosnia and Herzegovina), LLM, senior assistant, teaches civil law subjects at the University of Travnik Faculty of Law, specializing in intellectual property IP). He is a third year PhD candidate in law, with a focus on civil law, in particular in the area of IP. Haris Hasić teaches IP the Civil Service Agency of Bosnia and Herzegovina; he is the focal point for B&H for the web portal for teaching IP with the support of WIPO, and has passed the official exam to be a representative for intellectual property rights at the Institute for Intellectual Property of Bosnia and Herzegovina. He is a co-author of two books in print with two more due to be published. Additionally, he has authored and co-authored a number of scientific papers and articles and has participated at several international IPrelated conferences. He was a co-lecturer for the World Trade Organization's Regional Trade Policy Course in Istanbul, Turkey. He is the recipient of the 'Educator of the year award' (teaching assistant category) for the academic year 2013-14 from the University of Travnik Faculty of Law. Haris Hasić teaches several IP courses at various levels. He also delivers lectures on IP topics to a wide array of groups and is active in popularizing intellectual property in B&H, including community outreach and consultancy work.
1
In 2000 only 1.1 per cent of B&H's population had access to the Internet, while that number was 67.9 per cent in 2013. Source: World Bank accessed 29 October 2014. 2 World growth of the number of Internet users from 2000 to 2014 was 676.3 per cent. Source: Internet World Stats, 'Internet Usage Statistics, The Internet Big Picture, World Internet Users and Population Stats' accessed 30 October 2014. 3 See Organization for Economic Cooperation and Development, Participative Web: User-Created Content (Directorate For Science, Technology and Industry Committee for Information, Computer and Communications Policy Working Party on the Information Economy DSTI/ICCP/IE(2006)7/FINAL 2007).
11
Haris Hasić, Deficiencies of Existing Systems for the Takedown of Copyright Infringing Content Hosted on the Internet in Bosnia and Herzegovina and Potential Solution _____________________________________________________________________________________ II.
MECHANISMS CURRENTLY AVAILABLE IN BOSNIA AND HERZEGOVINA FOR REMOVING COPYRIGHT INFRINGING CONTENT HOSTED ON THE INTERNET
B.
B&H does not have specialized intellectual property courts. In the Federation of Bosnia and Herzegovina6, all copyright claims are processed by the business law division of municipal courts of general jurisdiction. B&H courts are not well suited for removing copyright infringing content from the Internet expeditiously, for the following reasons:
When copyright infringing content is hosted on the Internet, the copyright holder can: (a)
Petition the infringer;
(b)
petition the courts; or
PETITIONING THE COURTS
(a) The average person cannot understand or use the courts or legal system in general;
(c) petition the Internet host service provider (IHSP).
(b)
the courts are overburdened,
A.
(c)
judicial relief is unacceptably slow; and
PETITIONING THE INFRINGER
(d) the judges lack knowledge and understanding of intellectual property law.
A prudent first step for the copyright holder is to petition the infringer to remove copyright infringing content that he or she has placed on the Internet. While this is not mandated by any statute in B&H, it stands to reason that at least some of the copyright infringement might have been committed as an accident or out of ignorance. Lack of knowledge and understanding of copyright rules is a significant problem in B&H.4 In cases of accident or misunderstanding, a simple notice to the infringer would most likely result in the removal of infringing content without the need to involve any other, more formal takedown mechanisms.
(i)
DIFFICULTY IN USING THE COURTS FOR THE AVERAGE USER
Given its peculiar nature as the by-product of a peace agreement and its varied formative legal ideologies, the Bosnian legal system is difficult to understand and use, even for legal professionals. Furthermore, in order to petition the courts for judicial relief, the copyright holder must first discover the identity of the infringer. Because infringement takes place on the Internet, the identity of the infringer can be nearly impossible to ascertain for an average citizen. If the identity of the infringer is known, the suit must be filed in the court where the infringer has his or her permanent residence. The suit must fulfil certain formal requirements.7 The copyright holder must also indicate the value of the claim, which is particularly difficult for online copyright infringement cases. The copyright holder must then pay filing fees on the amount being sought upfront, at the time of filing. The processing of intellectual property cases can be very expensive 8 and time intensive. Understandably, given the
However, as compliance is strictly voluntary, the infringer can refuse to cooperate or even ignore the petition altogether. Still, any takedown method should require the copyright holder to make a good 5 faith effort to petition the infringer prior and as a precursor to taking any other steps.
4
This problem is pervasive in all segments of society. As this paper will show it is also present in the courts and also in other intellectual property enforcement institutions. It is probable that this lack of knowledge can be attributed to two primary causes: (1) intellectual property is not considered particularly valuable or important by the society as a whole due to cultural and pragmatic reasons; and (2) there is very little intellectual property education and awareness at the university level and almost no formal intellectual property education at elementary and high school levels. Piracy and counterfeiting are rampant and accepted. Further research into the causes of this problem is both beyond the purview of this paper and warranted on a much more extensive level. 5 The term 'good faith effort' is being used as a legal standard that would need to be ascertained in every particular case. It should, however, include an effort to contact the infringer and to offer a reasonable deadline to remove the content. Because of the frantic nature of the
Internet, a reasonable deadline would be, for example, one working day or even potentially shorter. 6 B&H consists of the Federation of Bosnia and Herzegovina, Republic Srpska and Brčko District. The Federation of Bosnia and Herzegovina only has courts of general jurisdiction. Republic Srpska has specialized business law courts but no intellectual property courts. 7 If a case does not fulfil these requirements, the suit will be returned to the petitioner, resulting in the loss of valuable time. 8 In one notable yet relatively straightforward copyright case (not involving online infringement) the ratio of reward to court costs was 1:13, and it took 3.5 years to resolve the case.
12
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ average age of such pending cases is 400 days.18 From January to September 2014, 176 cases took 19 more than 912 days to resolve.
urgent nature of such lawsuits, it can be difficult for the average person to handle the claim properly. (ii)
THE OVERWHELMING BACKLOG OF CASES Under Article 160 of the Copyright and Related Rights Law of B&H20, the copyright holder can ask the courts to issue a provisional measure. For copyright holders to succeed, they must prove a series of claims, including that:
At the end of 2013, there were 20,120 unresolved cases at the business law divisions of the courts of the Federation of Bosnia and Herzegovina.9 As of 30 September 2014, the Sarajevo Municipal Court10 business law division alone had 2,409 unresolved 11 involving business trespass, business cases property law, business contract law or intellectual property protection. There are ten judges in the 12 business law division. The average caseload for the business law division for 2013 was 289 cases per 13 judge. (iii) THE TIME IT TAKES TO RECEIVE JUDICIAL RELIEF For the Sarajevo Municipal Court the 'optimal'14 timeline for resolving intellectual property cases is 210 days.15 For the purposes of removing content from the Internet this time frame is unacceptable. The fastest a case can be resolved by law is 90 16 days. This too is problematic, and neither time frame is realistic. The more realistic 'predicted' timeline for resolving a case is 912 days.17 The
•
They are the copyright holder;
•
a danger exists that enforcing the claim could be made impossible;
•
the provisional measure is necessary to prevent the occurrence of damage; and
•
the copyright holder would recompense the alleged infringers if the claim is unfounded.
It is a very legally technical rule. However, no court has issued this provisional remedy in the four years it 21 has been available to the courts. (iv)
LACK OF KNOWLEDGE AND UNDERSTANDING OF INTELLECTUAL PROPERTY CASES BY THE JUDGES
9
High Judicial and Prosecutorial Council of B&H, 'Visoko sudsko i tužilačko vijeće za Bosnu i Hercegovinu Godišnji izvještaj za 2013. Godinu' (Yearly report for the year 2013) accessed 27 October 2014. 10 This is the largest municipal court in the Federation of B&H (FB&H). It is indicative of all the courts in FB&H. 11 Sarajevo Municipal Court, 'Izvještaj o poštivanju optimalnih i predvidivih rokova' (Report on the Application of Optimal and Predictable deadlines) issued by the Court Case Management System on 20 October 2014. 12 Sarajevo Municipal Court, 'Bulletin of the Sarajevo Municipal Court' (March 2014 Issue n 25) 32. 13 Ibid. 14 The courts of B&H have a two-tier system for deadlines to resolve pending cases. The first tier is the optimal deadline. This represents the number of days the law says this case must be resolved in. There are no sanctions for breaching this deadline. The second tier is the expected deadline. This is a more realistic expectation for how many days it actually will take to resolve the case, as calculated by the Court itself on the basis of the current caseload and on several other factors including past performance. 15 Sarajevo Municipal Court, 'Izvještaj o poštivanju optimalnih i predvidivih rokova' (Report on the application of optimal and predictable deadlines) issued by the Court Case Management System on 20 October 2014 at 14:57:36. 16 Zakon o parničnom postupku Federacije Bosne i Hercegovine (Law of Civil Procedure) (Službene novine Federacije Bosne i Hercegovine 53/03, 73/05, 19/06). 17 Sarajevo Municipal Court, 'Izvještaj o poštivanju optimalnih i predvidivih rokova' (Report on the application
It is difficult to measure actual knowledge and understanding of the principles of intellectual property of judges. However, circumstantial evidence shows that the lack of knowledge and understanding of intellectual property on the part of judges is a real problem. In 2010 B&H adopted a set of eight new laws protecting intellectual property, notably different from the previous laws. Their understanding requires careful study. It is doubtful that given the caseloads, such careful study is being carried out by the judges. Especially as intellectual property cases are not that prominent or frequent in 22 Bosnian courts. For that purpose, the Centres for of optimal and predictable deadlines) issued by the Court Case Management System on 20 October 2014 at 14:57:36. 18 Ibid. 19 Ibid. 20 Zakon o autorskim i srodnim pravima Bosne i Hercegovine (Službeni glasnik Bosne i Hercegovine 63/10). 21 Proving status as the copyright holder requires the issuance of a certificate by the Institute for Intellectual property of Boznia and Herzegovina, which can take up to 30 days. An additional 30 days must be given for processing the claim, according to private conversations with some of the judges. 22 In private conversations with the authors, judges admit that they see on average one intellectual property case a year. Only one judge admitted to seeing several intellectual
13
Haris Hasić, Deficiencies of Existing Systems for the Takedown of Copyright Infringing Content Hosted on the Internet in Bosnia and Herzegovina and Potential Solution _____________________________________________________________________________________ Education of Judges and Prosecutors of both the Federation of Bosnia and Herzegovina and the Republic Srpska commissioned a guide for judges on intellectual property.23 Yet, the guide is rife with errors, omissions, and misunderstandings.
identification make the IHSP ideal for removing infringing content from the Internet. This was 28 and recognized by both governments researchers.29 In B&H, IHSPs are shielded from liability for, among other things, copyright infringement for hosting infringing content. Pursuant to the provisions of Article 26 of the Law on the Electronic Legal and Business Transactions, no liability exists provided that five conditions are met:
One such error is demonstrative. On pages 21, 286, and 289, it is stated that Articles 120, 121, 122, 123, and 124 of the Copyright and Related Rights Law relate to criminal sanctions for copyright infringement. Articles 120, 121, 122, 123, and 124 of the Copyright and Related Rights Law instead relate to the related rights of the performer.24 The courts in B&H are not an effective means of removing copyright infringing content from the Internet, at least not in a timely manner. C.
(a) That the IHSP itself did not post the infringing material;30 (b) that the IHSP does not have reliable cognition of the infringement;
PETITIONING THE IHSP (c) that the IHSP is not familiar with any facts or circumstances from which the infringement is obvious;
In order for content to be hosted on the Internet, the infringer will most likely25 use the services of a third party - an Internet hosting service provider (IHSP).26 While the identity of the infringer can be hard, if not impossible, to ascertain in most cases, that is not the case with an IHSP. They are required by law27 to make their contact information easily available. Its role as an intermediary in the infringement of copyright and this ease in
(d) that the IHSP begins the process or removing or disabling access to the infringing material in question as soon as the IHSP is informed or receives cognition of infringement; and (e) that the service user is not subordinated or under the supervision of the IHSP.
property cases a year. Additionally an examination of the Court Case Management System has revealed that currently there is less than a dozen pending intellectual property cases. 23 Centres for Education of Judges and Prosecutors of the Federation of Bosnia and Herzegovina and Republic Srpska, 'Priručnik iz oblasti intelektualnog vlasništva za sudije' Bosnia and Herzegovina 2013 accessed 27 October 2014. 24 The right of Remuneration for Private Use, Remuneration for Public Communication and Rental of the Fixation of Performance, Presumed Transfer to a Film Producer, Use of Performance for the Completion of an Audiovisual Work and Performance Given within the Scope of Employment respectively. 25 It is possible that the infringer will use his or her own server to host content on the Internet. In those instances, the infringer will not be using the services of an IHSP for hosting, but will be using mere conduit and caching services from an IHSP, both of which do not fall under the purview of this paper. 26 An Internet Hosting Service Provider for the purposes of this work will be defined as any entity that offers services directly resulting in a copyright infringing work being hosted on the Internet. For purposes of clarification, hosting is essentially providing space to store content on the Internet that can then be accessed by others. 27 Article 15 of the Zakon o elektronskom pravnom i poslovnom prometu (Law on the Electronic Legal and Business Transactions) (Službeni glasnik Bosne i Hercegovine 88/07).
Article 26 does not provide, per se, a concrete set of steps that must be followed in order for the copyright holder to petition the IHSP to take down copyright infringing content. Rather, it provides the IHSP with a safe harbour from prosecution for hosting infringing content if it removes such content upon learning of its infringing nature. If the IHSP does not act to remove content upon gaining reliable cognition or upon being presented with facts or circumstances from which infringement is obvious, the IHSP becomes liable for copyright infringement.
28
Recital 59 of the Directive (EC) 29/2001 on the harmonization of certain aspects of copyright and related rights in the information society (Infosoc directive) [2001] OJ L167/10: In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. 29 For one such example see J de Beer and CD Clemmer, 'Global Trends in Copyright Enforcement: A Non-Neutral Role for Network Intermediaries?' (2009) accessed 28 October 2014. 30 This eliminates all those possibile instances where the infringer is itself the IHSP.
14
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ It is uncertain what exactly constitutes reliable cognition or what is to be taken as facts or circumstances from which the infringement is obvious. No case has addressed this issue. Additionally, no legislative or administrative guidance on interpreting these provisions exists. This results in a high degree of legal uncertainty, which favours the infringer.
Article 26 of the Law on Electronic Legal and 35 Business Transactions of B&H adopts Article 14 of the EU Directive on electronic commerce. B&H 36 essentially copied the EU rules, but poorly. Though there is some guidance for the interpretation of Article 14 by the European Court of Justice37, the EU model encourages self-regulation on the part of the IHSPs.38 This self-regulation to date has failed to produce an effective system. It introduces uncertainty on the part of all actors, and, as was seen in Bosnia, uncertainty tends to favour the infringer. In practice a multitude of often vary different procedures exist and it is not easy, either for intermediary service providers or for victims of illegal content, to determine which one applies and 39 in what way. Problems with the Article 14 mechanism were evident in the results of the public 40 consultation that was conducted in 2010. This was 41 echoed by the researchers and by judges.42
In straightforward cases31, a petition to the IHSP will most likely result in the removal of the content. If the slightest doubt exists, however, the IHSP can always claim that it did not have reliable cognition, or that there was uncertainty, which made infringement non-obvious. With that, it can be assumed that the IHSP will be biased in favour of the service user. Unless it is compelled, the IHSP will most likely err in favour of its user and direct the copyright holder to seek judicial relief. It seems clear that the IHSP, and not the infringer, should remove the infringing content from the Internet. However, the existing rules are biased in favour of the IHSP and the infringer.
35
III.
B&H is not a member of the European Union and thus does not have the obligation to adopt EU directives, but it does so with the aim of joining the European Union. 36 There is a tendency in B&H to adopt legislation without understanding it or without adapting it, where possible, to the needs and peculiarities of the Bosnian legal system. There is also a tendency to create translation errors in the adoptions. In this instance, where Article 14 of the Directive uses the standard of 'actual knowledge' which should have been translated as 'stvarno znanje' the translated term used is 'pouzdano saznanje' which translates as 'reliable cognition', thus potentially making the acquis incompatible with B&H law and hence defeating the purpose of the transposition and depriving itself of EU legal experience on this matter. 37 See for instance Case C-324/09 L'Oréal v eBay [2011] 2011 I-0601; recital 49 of the Directive on electronic commerce; recital 29 of the Directive (EC) 48/2004 on the enforcement of intellectual property rights [2004] OJ L 195/16; recital 52 of the Infosoc directive. 38 See recital 49 of the Directive on electronic commerce. 39 European Commission, Online Services, Including eCommerce in the Single Market (Commission staff working document SEC (2011) 1641 final 2012) 25. 40 European Commission, Summary of the results of the Public Consultation on the future of electronic commerce in the Internal Market and the implementation of the Directive on electronic commerce (2000/31/EC) available at accessed 29 October 2014 ch 5; European Commission, E-commerce Action Plan 2012-2015 State of play 2013 (Commission staff working document SWD (2013) 153 final) 17: 'In particular they considered that there is too much regulatory fragmentation and legal uncertainty, growing costs due to inefficiencies, too many instances of too slow action against illegal content and instances of action against legal content.' 41 For one example see T Verbiest and others, 'Study on the Liability of Internet Intermediaries' (European Commission
COMPARATIVE LAW APPROACHES FOR TAKING DOWN COPYRIGHT INFRINGING CONTENT HOSTED ON THE INTERNET
In B&H the copyright holder does not have an effective method available to remove infringing content from the Internet in a timely manner. A working system must be implemented if B&H wants to reap the benefits of creative endeavours. In order to determine what system B&H should implement, this article examines two of the most prominent approaches, the EU and the US takedown mechanisms. A.
EU TAKEDOWN MECHANISM
Acquis communautaire32 does not have a specific takedown mechanism for removing copyright infringing content from the Internet. It has a 33 'horizontal approach to Internet service liability' , as 34 found in the EU Electronic Commerce Directive. 31
If, for example it is blatantly obvious from the work itself who the author is or if the infringer makes it obvious that the right holder is someone else. 32 The combined body of European Union Law. 33 P Baistrocchi, Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce, 19 Santa Clara High Tech LJ 111 (2002) available at: accessed 29 October 2014 117. 34 Directive (EC) 31/2001 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) [2000] OJ L 178/1.
15
Haris Hasić, Deficiencies of Existing Systems for the Takedown of Copyright Infringing Content Hosted on the Internet in Bosnia and Herzegovina and Potential Solution _____________________________________________________________________________________ As a result, the European Commission has decided to work on improving the Article 15 takedown mechanism.43 The EU system for taking down infringing content is itself deeply flawed and in need of an overhaul. B.
the Internet, that if followed by the IHSP, creates a 47 safe harbour from secondary liability for the IHSP. Some have credited Section 512 as making the modern Internet possible.48 In October 2014 Google alone received requests for the removal of 49 35,436,492 URLs. For Google, use of notice and takedown requests has been on a constant and sometimes exponential rise.50 However, the US Section 512 system is flawed in that copyright 51 holders can exploit it for non-valid copyright reasons and for reasons other than copyright protection.52 This trend is expected to continue as
US TAKEDOWN MECHANISM
Unlike the European Union, the United States has opted for a vertical approach44 to IHSP liability and adopted a separate and special notice and takedown 45 regime in Section 512 of the United States 46 Copyright Act of 1976. It sets out a clear notice and takedown procedure for the copyright holder to use upon discovery of infringing content being hosted on
47
For more see CR Gellis, Navigating the DMCA 1 August 2012) Internet Law for the Business Lawyer 2nd Ed ABA Publishing 2012 available at SSRN accessed 29 October 2014 and CR Gellis, 2013 State of the Law Regarding Internet Intermediary Liability for User-Generated Content (1 November 2013) available at SSRN or accessed 29 October 2014; See also E Lee, Decoding the DMCA Safe Harbours (27 January 2009) Columbia Journal of Law and the Arts Forthcoming available at SSRN or accessed 29 October 2014. 48 David Kravets, '10 Years Later, Misunderstood DMCA is the Law That Saved the Web' (Wired, 27 October 2008) accessed 29 October 2014, in particular 'Blogs, search engines, e-commerce sites, video and social-networking portals are thriving today thanks in large part to the noticeand-takedown regime ushered in by the much-maligned copyright overhaul.' 49 Google, 'Transparency Report' accessed 29 October 2014. 50 Google, 'How Google Fights Piracy' (September 2013) accessed 29 October 2014. 51 JM Urban L Quilter, 'Efficient Process or Chilling Effects'? Takedown Notices under Section 512 of the Digital Millennium Copyright Act Summary Report' accessed 29 October 2014. For full report see JM Urbanand L Quilter, 'Efficient Process or "Chilling Effects"? Takedown Notices Under Section 512 of the Digital Millennium Copyright Act' (23 May 2006) Santa Clara Computer and High Technology Law Journal Vol 22 p 621, 2006 available at SSRN accessed 29 October 2014. 52 Some of these abuses are so egregious that some websites have Takedown Notice Hall of Shames, such as Electronic Frontier Foundation, 'Takedown Hall of Shame' accessed 29 October 2014 and Wordpress, 'Hall of Shame' accessed 29 October 2014; Ernesto, 'Google Discarded 21,000,000 Takedown Requests in 2013' (Torrentfreak 27
Markt/2006/09/E Service Contract ETD/2006/IM/EZ/69) [2007] available at 14,15; See, in particular: Providers as technical intermediaries, cannot always handle and assess complex legal matters. Whilst in some cases it might be easy to assess the illegality of contents or activities, such as those dealing with pedophilia, it is quite hard, even for lawyers, to tell if a trademark or a copyright has been infringed.' (p 14) And also see: '... if providers are to act upon mere notifications there could be potential abuse by fictitious 'victims' seeking to hamper competitor or adversary.' (p 15). 42 Cartier v B Sky B [2014] EWHC 3354 (Ch) [199] – [204]. 43 European Commission, E-commerce Action Plan 20122015 State of Play 2013 (Commission staff working document SWD (2013) 153 final) ch 3.1. 44 P Baistrocchi, Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce, 19 Santa Clara High Tech LJ 111 (2002) available at: accessed 29 October 2014 117. 45 Adopted as Online Copyright Infringement Liability Limitation Act (Official title: To amend title 17, United States Code, to implement the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, and for other purposes, as part of the Digital Millennium Copyright Act), came into force on 28 October 1998, part of the Digital Millennium Copyright Act (Official title: To amend title 17, United States Code, to implement the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, and for other purposes) or Digital Millennium Copyright Act, 17 U.S.C. § 512. 46 Official title: An Act for the general revision of the Copyright Law, title 17 of the United States Code, and for other purposes, effective as of 1 January 1978.
16
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ meaning of Article 12 of the Paris Convention57 for B&H and the central B&H administrative institution 58 for intellectual property.
some copyright holders admit to using automated 53 systems to send notice and takedown requests. Widespread abuse of the Section 512 mechanism has led to the formation of the Chilling Effects website for the monitoring of notice and takedown requests.54 Copyright holders are not fully satisfied with the existing system either.55 Both the EU and US systems have significant problems. Thus they cannot be recommended for use, as in B&H. IV.
A.
REASONS FOR USING THE INSTITUTE AS AN INTERMEDIARY
As a government institution, the Institute would be neither prejudiced toward the interests of the copyright holder, nor have a particular reason to favour the alleged infringer. Furthermore the Institute would consider the interests of the IHSP, the interests of legitimate users and the society as a whole. The Institute is tasked with observing and ensuring the balance of rights and interests inherent in intellectual property law. Thus the Institute would be a neutral filter, allowing only those notices based on law, while at the same time bringing certainty to the proceedings.
INSTITUTE FOR INTELLECTUAL PROPERTY OF BOSNIA AND HERZEGOVINA AS INTERMEDIARY
The EU system creates uncertainty and favours the infringer, while the US system favours the copyright holder. Both are open to abuse due to a distinct lack of review and oversight by a neutral third party. For B&H that intermediary could and should be the Institute for Intellectual Property of Bosnia and Herzegovina (The Institute). The Institute56 is a special industrial property service within the
Lack of knowledge and understanding of copyright law is a significant problem in the process of removing infringing material.59 The Institute, on the other hand, understands copyright law. It drafted 60 the Copyright and Related Rights Law of B&H and has direct jurisdiction in matters of copyright.
December 2013) accessed 29 October 2014; Google, 'Transparency Report: Government removal requests continue to rise' (Official Blog, 19 December 2014) accessed 29 October 2014 'Over the past four years, one worrying trend has remained consistent: governments continue to ask us to remove political content.' 53 Mitch Stoltz, 'In Hotfile Docs, Warner Hid References to "Robots" And Its Deliberate Abuse of Takedowns' (Electronic Frontiers Foundation Deeplinks Blog 9 October 2014) accessed 29 October 2014. 54 Berkman Centre for Internet and Society at Harvard, 'About Us' accessed 29 October 2014. 55 See S Aistars, 'Statement for the Record of Sandra Aistars, Chief Executive Officer, Copyright Alliance, Section 512 of Title 17 before the Judiciary Committee's Subcommittee on Courts, Intellectual Property and the Internet' (Copyright Alliance 13 March 2014) accessed 29 October 2014, in particular: 'It is incontrovertible that roughly fifteen years after its passage, the DMCA is not working as intended either for the authors and owners of copyrighted works who rely on its notice and takedown and repeat infringer provisions to reduce infringement of their works, nor for the website operators who must respond to the notices sent. When authors are forced to send upwards of 20 million notices a month to a single company— often concerning the same works and the same infringers—something is amiss.' 56 Founded by the Zakon o osnivanju Instituta za intelektualno vlasništvo Bosne i Hercegovine (Službeni glasnik BiH 43/04) (Law Establishing the Institute for Intellectual Property of Bosnia and Herzegovina).
The Institute centralizes and focusses the activity of taking down copyright infringing content from the Internet. This centralization brings several benefits to the process: increased coordination with IHSPs, other enforcement bodies, right holder associations, user associations, the judiciary and other significant entities in various activities; and the ability to maintain a database of repeat offenders and all notices and takedowns, akin to the Chilling Effects 61 website, but potentially with a fuller dataset , open to research and analysis, with appropriate safeguards.62
57
Paris Convention for the Protection of Industrial Property (as amended in 1979). 58 Institute for Intellectual property of Bosnia and Herzegovina, 'Jurisdiction' (14 June 2011) accessed 30 October 2014 based on Article 7 of BH Institute Law. 59 See Section 2.1. 60 Ibid. 61 Chilling Effects does not receive all notice and takedown requests and participation is voluntary. 62 One of the criticisms of Chilling Effects is that it could potentially be used to find and use infringing content. See S Aistars, 'Statement for the Record of Sandra Aistars, Chief Executive Officer, Copyright Alliance, Section 512 of Title 17 Before the Judiciary Committee's Subcommittee on Courts, Intellectual Property and the Internet' (Copyright Alliance 13 March 2014)
17
Haris Hasić, Deficiencies of Existing Systems for the Takedown of Copyright Infringing Content Hosted on the Internet in Bosnia and Herzegovina and Potential Solution _____________________________________________________________________________________ where there is no likelihood of confusion67, the 68 IHSP. If the petition does not work, the copyright holder should submit the takedown notice to the Institute. It would be the duty of the copyright holder to present all the procedurally mandated information for the processing of the notice and to pay a reasonably small fee.
The Institute's official governmental role benefits the process. It is staffed by highly qualified government officials who are well versed in the nuances of the legal system of B&H. All actions of the Institute are transparent because citizens have a guaranteed freedom to access information about it. Additionally, the Institute is subject to constitutional checks and balances, making abuse of the process unlikely. A mechanism exists to address such abuse as well.
A special department would be created within the Institute to deal with the takedown requests. Upon receipt of the takedown request, the Institute would review the notice. Only those notices with an actual basis in the rules of Copyright law would be allowed to proceed to the next stage. By reviewing the notice, the Institute would be able to filter abuses and bad faith notices. A system would need to be in 69 place to sanction bad faith abuses.
The Institute could advise the copyright holder prior to filing the takedown notice about his or her rights, the limitation of such rights, and what steps to take. After filing, the Institute can advise IHSPs and alleged infringers of their rights and any possible defences. If the copyright infringing content is hosted in a different country, the Institute would be ideally suited to understand that country's takedown procedures and navigate intergovernmental cooperation. The Institute could also advise the copyright holder on issues pertaining to the lawsuit 63 and subsequent trial, and advise the IHSP on what evidence to preserve and in what way.
If the takedown notice is warranted, the Institute would notify the IHSP and request removal. This notification would, beyond a doubt, represent reasonable cognition under Article 26 of the Law on Electronic Legal and Business Transactions. Depending on the review and the nature of the problem, the Institute would give a short, reasonable deadline for compliance.70 The Institute would instruct the IHSP to preserve certain evidence for use in a court of law. If the IHSP fails to comply, the Institute would advise the copyright holder on further legal remedies against the infringer and, due to its secondary liability, the IHSP. The Institute could also notify relevant regulatory bodies of the lack of cooperation on the part of the IHSP. If the IHSP complies, the infringing content is taken down and the Institute would advise the copyright holder on potential legal remedies against the infringer.
Being an intermediary would be a potential source of revenue for the Institute and the budget of B&H in the form of fees paid for services rendered. B.
THE PROPOSED TAKEDOWN PROCEDURE WITH THE INSTITUTE AS INTERMEDIARY
Bosnia and Herzegovina should introduce a concrete takedown procedure64 for removing copyright infringing content from the Internet with the 65 option for the copyright holder to use the Institute as an intermediary.
The Institute is not usurping the courts here, but its actions might actually reduce the burden on the courts. Any and all pre-existing legal measures are still available to their respective parties. Additionally there exists further judicial and administrative oversight of the work of the Institute.
The copyright holder should always initiate the procedure.66 Upon discovering infringement of copyright protected material hosted on the Internet, the copyright holder should make a good faith effort to petition the infringer and, in straightforward cases
accessed 29 October 2014. 63 Such as advising the copyright holder on the nuances of the law and on best practices. 64 With elements similar to the 17 U.S.C. § 512. 65 The copyright holder would not be mandated to use the Institute as an intermediary. The copyright holder merely would have the option of either using the existing systems or asking the Institute to be the intermediary in the takedown process. 66 The Institute should never have to be tasked with monitoring for copyright infringement. This is not in line with the private civil right nature of copyright. It is a task much better suited for commercial ventures.
67
For instance if the name of the author is visible in the work, pursuant to Article 10 of the Copyright and Related Rights Law, or if it is abundantly and undoubtedly clear from the circumstances that the content being hosted is infringing material. 68 In those cases, the IHSP would have to report the takedown request to the Institute for reasons of inclusion in the official database. 69 Perhaps a register similar to the one of the infringers, a monetary fee, automatic dismissal of takedown notices for a period of time, or a combination of all of these. 70 One business day seems reasonable, though it could be shorter.
18
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ C.
SCALABILITY PROBLEM WITH USING THE INSTITUTE AS AN INTERMEDIARY
impartial, knowledgeable, centralized, and governmentally sectioned, as well as a source of revenue. The potential problem with using the Institute is the issue of scalability and lack of experience with such a practice.
The biggest potential problem with using the Institute as an intermediary may be the issue of scaling. Could the system process ever increasing numbers of takedown requests?
Even if the proposed solution proves to be unworkable, one thing remains certain, that is, if copyright is to remain relevant in the digital age it must adapt and find ways to protect the inherent balance of the interests of all parties involved.
The true scope of the need for a takedown procedure in B&H is not known as of yet.71 It is reasonable to conclude that the number of the requests will grow. This system might not be ideal for large countries or for developed nations. It would be worth researching if some parts of the system might be used to augment and improve existing systems and in what ways. It might be worth researching whether private venture intermediaries could be used to augment takedown mechanisms, but the focus would have to be on mechanisms for ensuring impartiality and transparency. V.
BIBLIOGRAPHY Aistars S, 'Statement for the Record of Sandra Aistars, Chief Executive Officer, Copyright Alliance, Section 512 of Title 17 Before the Judiciary Committee's Subcommittee on Courts, Intellectual Property and the Internet' (Copyright Alliance 13 March 2014) accessed 29 October 2014
CONCLUSION
When a copyright holder discovers copyright protected content hosted on the Internet without his or her approval, the primary concern is to remove such infringing content as quickly as possible. If copyright law is to remain relevant in the digital age, it must provide the copyright holder with an effective and expeditious mechanism for taking down all infringing instances of copyright protected works.
An Act for the general revision of the Copyright Law, title 17 of the United States Code, and for other purposes, effective as of 1 January 1978 Baistrocchi P, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce' 19 Santa Clara High Tech LJ 111 (2002) available at: accessed 29 October 2014
Bosnia and Herzegovina does not have such mechanisms. Petitioning the infringer is not likely to bring about the desired outcome. The courts are particularly complicated to use, overburdened with cases, take far too long, and are inadequately knowledgeable of intellectual property matters to be of use. The IHSPs are ideally suited, being the intermediaries between the infringer and the rest of the world and technical enablers of the infringement itself, but the current system does not compel them to act and so the system and the IHSP conspire to aid the infringers through inaction or inadequate action.
Berkman Centre for Internet and Society at Harvard, 'About Us' accessed 29 October 2014 Cartier v B Sky B [2014] EWHC 3354 (Ch) [199] – [204] Case C-324/09 L'Oréal v eBay [2011] 2011 I-06011 Centres for Education of Judges and Prosecutors of Federation of Bosnia and Herzegovina and Republic Srpska, 'Priručnik iz oblasti intelektualnog vlasništva za sudije' Bosnia and Herzegovina 2013 accessed 27 October 2014
Both the EU and US takedown systems have deep flaws related to their bias in favour of either the infringer or the copyright holder. One method to remove bias is to introduce an impartial third party to mediate the takedown process. For B&H such an intermediary should be the Institute. It would be
de Beer j and Clemmer CD, 'Global Trends in Copyright Enforcement: A Non-Neutral Role for Network Intermediaries?' (2009) accessed 28 October 2014
71
Research has failed to yield one such example of a request for removal under the current regime. This however cannot be taken as indicative. The author has had need of such a system several times already this year as have friends and acquaintances, who all find the current system unusable.
19
Haris Hasić, Deficiencies of Existing Systems for the Takedown of Copyright Infringing Content Hosted on the Internet in Bosnia and Herzegovina and Potential Solution _____________________________________________________________________________________ Digital Millennium Copyright Act (Official title: To amend title 17, United States Code, to implement the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, and for other purposes)
accessed 29 October 2014 Gellis CR, 'Navigating the DMCA (1 August 2012) Internet Law for the Business Lawyer' 2nd Ed ABA Publishing 2012 available at SSRN accessed 29 October 2014
Directive (EC) 29/2001 on the harmonization of certain aspects of copyright and related rights in the information society (Infosoc directive) [2001] OJ L167/10
Google, 'How Google Fights Piracy' (September 2013) accessed 29 October 2014
Directive (EC) 31/2001 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) [2000] OJ L 178/1
Google, 'Transparency Report: Government Removal Requests Continue to Rise' (Official Blog, 19 December 2014) accessed 29 October 2014
Directive (EC) 48/2004 on the enforcement of intellectual property rights [2004] OJ L 195/16 ECP 'Notice-And-Take-Down Code of Conduct' (1 October 2008) accessed 29 October 2014
Google, 'Transparency Report' accessed 29 October 2014
Electronic Frontier Foundation, 'Takedown Hall of Shame' accessed 29 October 2014
High Judicial and Prosecutorial Council of Bosnia and Herzegovina, 'Visoko sudsko i tužilačko vijeće za Bosnu i Hercegovinu Godišnji izvještaj za 2013. Godinu' (Yearly report for the year 2013) accessed 27 October 2014
Ernesto, 'Google Discarded 21,000,000 Takedown Requests in 2013' (Torrentfreak 27 December 2013) accessed 29 October 2014 European Commission, 'E-commerce Action Plan 2012-2015 State of Play 2013' (Commission staff working document SWD (2013) 153 final) 17
Institute for Intellectual property of Bosnia and Herzegovina, 'Jurisdiction' (14 June 2011) accessed 30 October 2014
European Commission, 'E-commerce Action Plan 2012-2015 State of Play 2013' (Commission staff working document SWD (2013) 153 final) ch 3.1
Internet World Stats, 'Internet Usage Statistics, The Internet Big Picture, World Internet Users and Population Stats' accessed 30 October 2014
European Commission, 'Online Services, Including eCommerce in the Single Market' (Commission staff working document SEC (2011) 1641 final 2012) 25 European Commission, 'Summary of the Results of the Public Consultation on the Future of Electronic Commerce in the Internal Market and the Implementation of the Directive on Electronic Commerce (2000/31/EC) available at: accessed 29 October 2014
Kravets D, '10 Years Later, Misunderstood DMCA is the Law That Saved the Web' (Wired, 27 October 2008) accessed 29 October 2014 Lee E, 'Decoding the DMCA Safe Harbours' (27 January 2009) Columbia Journal of Law and the Arts Forthcoming available at SSRN ; or accessed 29 October 2014
Gellis CR, 2013 'State of the Law Regarding Internet Intermediary Liability for User-Generated Content' (1 November 2013) available at SSRN or
Online Copyright Infringement Liability Limitation Act (Official title: To amend title 17, United States Code,
20
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ to implement the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, and for other purposes, as part of the Digital Millennium Copyright Act), came into force on 28 October 1998
World Bank accessed 29 October 2014 Zakon o autorskim i srodnim pravima Bosne i Hercegovine (Službeni glasnik Bosne i Hercegovine 63/10)
Organization for Economic Cooperation and Development, Participative Web: User-Created Content (Directorate for Science, Technology And Industry Committee for Information, Computer And Communications Policy Working Party on the Information Economy DSTI/ICCP/IE(2006)7/FINAL 2007)
Zakon o elektronskom pravnom i poslovnom prometu (Law on Electronic Legal and Business Transactions) (Službeni glasnik Bosne i Hercegovine 88/07) Zakon o osnivanju Instituta za intelektualno vlasništvo Bosne i Hercegovine (Službeni glasnik BiH 43/04) (Law Establishing the Institute for Intellectual Property of Bosnia and Herzegovina)
Paris Convention for the Protection of Industrial Property (as amended in 1979)
Zakon o parničnom postupku Federacije Bosne i Hercegovine (Law of Civil Procedure) (Službene novine Federacije Bosne i Hercegovine 53/03, 73/05, 19/06)
Sarajevo Municipal Court, 'Bulletin of the Sarajevo Municipal Court' (March 2014 Issue n 25) Sarajevo Municipal Court, 'Izvještaj o poštivanju optimalnih i predvidivih rokova' (Report on the application of optimal and predictable deadlines) issued by the Court Case Management System on 20 October 2014 at 14:57:36
______________
Stoltz M, 'In Hotfile Docs, Warner Hid References to "Robots" and its Deliberate Abuse of Takedowns' (Electronic Frontiers Foundation Deeplinks Blog 9 October 2014) accessed 29 October 2014 Urban JM and Quilter L, 'Efficient Process or "Chilling Effects"? Takedown Notices under Section 512 of the Digital Millennium Copyright Act Summary Report' accessed 29 October 2014 Urban JM and Quilter L, 'Efficient Process or "Chilling Effects"? Takedown Notices Under Section 512 of the Digital Millennium Copyright Act' (23 May 2006) Santa Clara Computer and High Technology Law Journal Vol 22 p 621, 2006, available at SSRN accessed 29 October 2014 Verbiest T et al, Study on the Liability of Internet Intermediaries (European Commission Markt/2006/09/E Service Contract ETD/2006/IM/EZ/69) [2007] available at accessed 29 October 2014 Wordpress, 'Hall of Shame' accessed 29 October 2014
21
services, where it can be assumed that the goodwill and distinctiveness of a trademark are not only worthy of protection, but also especially vulnerable.
3 PROTECTION AND REGULATION OF HIGHLY RENOWNED TRADEMARKS - A BRIEF OVERVIEW OF RECENT DEVELOPMENTS IN BRAZILIAN TRADEMARK LAW
Indeed, this shows that highly renowned trademarks do not just play a special role in the 'classic' market economies of industrialized countries. They are developing an increased economic and legal importance, particularly in emerging markets such as the so-called 'BRIC' group of countries to which Brazil belongs. Special protection for highly renowned trademarks has now acquired even more legal and economic relevance in Brazil as a result of the substantial legal problems arising from the 2014 FIFA World Cup and 2016 Olympic Games, including trademark piracy and infringement, misrepresentation, and especially ambush 2 marketing.
DR ENZO BAIOCCHI∗ ABSTRACT This article analyses Brazilian legislation for protecting and regulating highly renowned trademarks in Brazil ('marcas de alto renome'). It aims to examine the problems arising from the interpretation and enforcement of Brazilian Intellectual Property Law and the latest Brazilian Patent and Trademark Office Resolution. It will then demonstrate possible legislative solutions that may be implemented to bring about improved and more effective protection and regulation of this special type of trademark in Brazil.
This brief study will analyse the protection and regulation of highly renowned trademarks ('marcas de alto renome') in Brazil, provided by Article 125 of the Brazilian Industrial Property Law (BIPL) and Brazilian Patent and Trademark Office (BPTO) Resolution No. 107 dated 19 August 2013, as well as the problems arising from their interpretation and 3 enforcement. This analysis will provide possible legislative solutions that may be implemented, in order to achieve improved and effective protection and regulation of this special kind of trademark protection, looking to other trademark law systems worldwide for comparison.
Keywords: Brazilian trademark law, highly renowned trademarks, protection and regulation I.
INTRODUCTION
The age of the global market economy and the information society has brought with it the increased potential for the infringement of intellectual property rights, especially in the field of trademark law. It has also led to a paradigm shift in the protection and enforcement instruments worldwide. Whilst more attention should be given to the protection and enforcement of intellectual property, there must be an equal balance of the interests of 1 trademark owners, competitors, and consumers. Protection against misappropriation and interference in the distinctive character of highly renowned trademarks is one of the basic components of any modern trademark law system. This is particularly true in the case of extended trademark protection for dissimilar goods or
2
See recent cases, for instance, CBF v Retrô Mania 3 July 2014 (3rd Commercial Court of First Instance, Court of Justice of Rio de Janeiro, Lawsuit No. 021828734.2014.8.19.0001); CBF v Johnson & Johnson 13 June 2014 (5th Commercial Court of First Instance, Court of Justice of Rio de Janeiro, Lawsuit No. 0198416-18.2014.8.19.0001); CBF v Technos 26 June 2013 (4th Commercial Court of First Instance, Court of Justice of Rio de Janeiro, Lawsuit No. 0217328-97.2013.8.19.0001); CBF v Coca-Cola 7 June 2011 (Court of Justice of Rio de Janeiro, Lawsuit No. 038319062.2009.8.190001); CBF v CEF 30 November 2010 (35th Federal Trial Court of the Second Federal Circuit, Rio de Janeiro, Lawsuit No. 2010. 02.01.007712-2). For court decisions, see José CT Soares, Marcas notoriamente conhecidas – marcas de alto renome vs. diluição (Lumen Juris 2010) 81. 3 According to the scope and page limit of this brief essay, a historical retrospective of Brazilian industrial property laws and trademark law doctrine in connection with the protection of famous and highly renowned trademarks will not be included. For a complete overview, see Morgado (n 2) 125; E Baiocchi, 'A proteção à marca de alto renome no Brasil', in DB Barbosa and K Grau-Kuntz (eds), Ensaios sobre o direito imaterial – estudos dedicados a Newton Silveira (Lumen Juris 2009) 231; Denis B Barbosa, Proteção das Marcas (Lumen Juris 2008) 131; Maitê C F Moro, Direito de Marcas (Revista dos Tribunais, 2003) 77, among others.
∗ Dr Enzo Baiocchi (Brazil) is Professor of Commercial Law at the National Faculty of Law, Federal University of Rio de Janeiro (UFRJ). He holds a Doctorate (Dr jur) and Master's (LLM.) degree in law from the Ludwig Maximilian University in Munich, Germany. He also teaches postgraduate courses in Intellectual Property and Competition Law at the Candido Mendes University and the Catholic University of Rio de Janeiro. The focus of his research and teaching activities is on Civil and Commercial Law, Intellectual Property, Competition Law, and Comparative Private Law. He is coordinator of the Study and Research Group on Commercial, Intellectual Property and Competition Law, registered in the Brazilian Directory of Research Groups of the National Council for Scientific and Technological Development (CNPq). 1
See Enzo Baiocchi, Der Schutz Bekannter Marken unter besonderer Berücksichtigung der zivilrechtlichen Sanktionen (Carl Heymanns 2012) 441; Mônica C R Morgado, Marcas de Alto Renome (Juruá 2013) 63.
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Enzo Baiocchi, Protection and Regulation of Highly Renowned Trademarks - A Brief Overview of Recent Developments in Brazilian Trademark Law _____________________________________________________________________________________ II.
PROTECTION AND REGULATION
A.
LEGAL THEORIES AND DEFINITIONS UNDER BRAZILIAN TRADEMARK LAW
B.
LEGAL PROTECTION ACCORDING TO BRAZILIAN INTELLECTUAL PROPERTY LAW
It is worth clarifying at the very beginning that the special protection set out in BIPL Article 125 differs from that in Article 6bis of the Paris Convention (implemented in BIPL Article 126) and TRIPS Article 16.3, as both of these relate to the protection of well known trademarks.7 In addition, the previous legal provision concerning the protection of notorious trademarks ('marca notória'), in accordance with Article 67 of the former Brazilian Industrial Property Act, Law No. 5772 of 21 December 1971, abrogated by Law No. 9279 of 14 May 1996), differs. As demonstrated below, BIPL Article 125 introduced a new legal concept to Brazilian trademark law - the 'marca de alto renome'—especially with regard to the legal requirements related to its practical implementation, which is completely different to what was until then common practice in Brazilian trademark law.
Law No. 9279 of 14 May 1996 (BIPL)4 does not provide a definition for highly renowned trademarks ('marca de alto renome'). BIPL Article 125 states briefly that 'A trademark which is registered in Brazil and considered as highly renowned will be guaranteed special protection, in all fields of activity.' That Article is now regulated by BPTO Resolution No. 107/2013, the main provisions of which are set out below. According to the BPTO, a sign is considered to be a highly renowned trademark, when its performance in distinguishing goods or services and its symbolic efficiency, expand beyond its original scope, thus exceeding the principle of speciality in trademark law, which looks to distinctiveness, recognition by a large portion of the public, quality, reputation and prestige, and its capacity to attract consumers as a 5 result of its mere presence.
As mentioned above, BIPL does not define what should be considered a 'marca de alto renome'. BIPL Article 125 states only that 'special protection' in all fields of activity will be guaranteed to trademarks registered in Brazil and considered to be highly renowned. It acts as an exception to the principle of specialization in Trademark Law (in other words, it is a type of extended protection for non-similar goods or services).
Unlike in Europe (for instance in England, France, and Germany) and the United States, Brazilian legal literature and jurisprudence have not developed and do not advocate any special doctrine for the protection of highly renowned trademarks. Therefore, the country does not necessarily have a standard legal justification or theory for this special kind of trademark protection. On the contrary, an analysis of legal texts shows that many of the country's lawyers, judges, and scholars import foreign trademark theories such as dilution, passing off, parasitic competition, unjust enrichment, etc. and quote them indistinctly within the national legal context, without referring sometimes to the particularities of case law or the specific legal requirements of the relevant foreign theory.
BIPL Article 125 is general and not a self-applicable legal clause, as it only provides two legal requirements for special protection to be granted: (i) the trademark must be registered in Brazil; and (ii) the trademark must be considered to be highly reputed (highly renowned). In other words, special protection is granted, regardless of the possibility of confusion as to the origin of goods and services or even damage to a trademark's good reputation. Based on the legal definition provided in Article 1.1 of BPTO Resolution No. 107/2013, BIPL Article 125 provides special protection against third party attempts to register any sign that imitates or copies any highly renowned trademark (albeit when there are no similarities between goods or services), in order to curb the chances of diluting its distinctive character. It can be assumed that it provides at least
Furthermore, national literature and jurisprudence both refer to positive reputation, prestige, and goodwill as attributes of so-called 'marcas de alto renome'. These expressions highlight the distinctive features of the sign, which appears as a 'symbol of quality' and whose economic and commercial value 6 deserves special legal protection per se. 4
English version available at: accessed 31 October 2014. 5 Article 1 BPTO Resolution No. 107 of 19 August 2013 accessed 31 October 2014; see also Maria AC Rodrigues, 'Parecer INPI/PROC/DICONS no 054/2002, de 09/10/2002' (2004) 72 Revista da ABPI 3, 15. 6 Daniela A Levigard and Nilson F Silva, 'A proteção das marcas de alto renome no Brasil' (2007) 86 Revista da ABPI 41, 52.
7
Regarding the non-implementation of TRIPS Article 16.3 in Brazilian Trademark Law, see E Baiocchi, 'A proteção à marca notoriamente conhecida fora do campo de semelhança entre produtos e serviços: a (não) aplicação do art. 16.3 do TRIPS no Brasil' (2009) 102 RABPI 3; E Baiocchi, 'Considerazioni sulla tutela allargata del marchio notoriamente conosciuto ai sensi dell`art. 16.3 TRIPS: uno studio dalla prospettiva del diritto dei marchi brasiliano' (2011) 3 RDI 130.
24
IPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ some indirect protection against dilution and undue exploitation of goodwill (parasitic exploitation).
Furthermore, as stated in Articles 3 and 4, the proof of alleged high reputation status depends on the assessment of three fundamental requirements:
Considering the lack of other legal requirements, BIPL Article 125 represents not only absolute and objective special trademark protection for dissimilar goods and services, but also the problem of interpretation and the insurmountable obstacle of its enforcement by trademark owners, as its wording is vague. As mentioned above, it is a general clause and is not self-applicable. C.
LEGAL REGULATION AND IMPLEMENTATION ACCORDING TO BPTO
BPTO Resolution No. 107 was published on 19 August 2013, to regulate the administrative procedures for the implementation of BIPL Article 125. This resolution is the most recent in a sequence of administrative provisions enacted by the BPTO regarding this matter and facilitates the process used to obtain recognition of high reputation status for registered trademarks in Brazil.
•
The recognition of the trademark by a wide proportion of the general public10 (as demonstrated by opinion polls, market surveys or any other capable means, such as media plans, materials and articles in the general media);
•
the quality, reputation and prestige that the public associates with the trademark and its goods or services (proved with trademark image surveys on a national scale); and
•
the degree of distinctiveness and uniqueness of the sign.
In addition to evidence of the above, trademark owners should also consider the following elements in establishing the trademark's high reputation status11:
The first Resolution - No. 110 - was published in 2004 (almost seven years after BIPL Article 125 came into effect in May 1997), and since then a total of four resolutions have been published containing different approaches to the implementation of this article.8
(a) The duration of the effective use of the trademark in the Brazilian market and, where applicable, in the international market; (b) the profile and proportion of actual or potential consumers/users of the products or services associated with the trademark, and the proportion of actual or potential consumers/users of other market segments that immediately and spontaneously identify the products or services associated with the trademark;
According to Articles 1.2 and 2 of Resolution 107/2013, the recognition of a trademark's high reputation status is a separate initial step (by means of an 'autonomous procedure') for the application of special protection through BIPL Article 125 and is therefore no longer bound to any incidental procedure (i.e. it is no longer necessary to request special protection and high reputation status via an opposition or administrative nullity 9 procedure). In other words, from now on, trademark owners may invoke the protection of BIPL Article 125 at any time during the validity of the trademark.
(c) the profile and proportion of actual or potential consumers/users of the products or services associated with the trademark, and the proportion of actual or potential consumers/users of other market segments that immediately and
8
10
BPTO Resolutions No. 110 of 2004, No. 121 of 2005, No. 23 of 2013 and most recently No. 107 of 2013, which supersedes all previous resolutions and came into effect according to its Article 16. 9 In this regard and in comparison with previous resolutions, Resolution No. 107/2013 represents a paradigm shift concerning the exact moment to request special protection through BIPL Article 125. Under Resolution No. 110/2004, special protection could be requested only in two situations (i.e., incidentally in the course of an administrative procedure): (i) as a defence in an opposition against a third party trademark applications (within 60 days from the publication of the application in the Official Gazette); or (ii) as a defence in the request for an administrative nullity process against the grant of a third party trademark registration (within 180 days from the date of grant), according to BIPL Articles 158 and 169, respectively.
In this regard see the answer of the Brazilian Group on 19 April 2013 to the AIPPI Question Q234 'Relevant public for determining the degree of recognition of famous marks, well-known marks and marks with reputation' accessed 31 October 2014. 11 Although the list provided in Article 4.4 of Resolution 107/2013 is quite long, it is not exhaustive. Therefore, other evidence may be presented by trademark owners in order to back up their arguments (e.g. the date the trademark was first used in Brazil and the length of effective promotion of the trademark in Brazil and other countries, mentioned in the first resolution – No. 110/2004). In comparison with former BPTO resolutions 110/2004, 121/2005 and 23/2013, the list provided in Article 4.4 of Resolution 107/2013 introduces slight changes and new elements that can be used to establish the trademark's high reputation status.
25
Enzo Baiocchi, Protection and Regulation of Highly Renowned Trademarks - A Brief Overview of Recent Developments in Brazilian Trademark Law _____________________________________________________________________________________ spontaneously recognize the trademark as a result of its tradition and rating in the market; (d) the methods trademark in Brazil;
for
commercializing
In cases where the special commission recognizes the trademark's high reputation status, this is registered and published in the BPTO magazine and database. In other words, the trademark is then officially considered to be a 'marca de alto 13 renome'. Any challenges to a trademark's high reputation status and its protection provided by BIPL Article 125 filed in petitions (such as oppositions or nullity procedures) do not oblige or require any comment from the BPTO. Therefore, since the implementation of Resolution 107/2013, the filing of special applications and procedures for the prior recognition of high reputation status is now mandatory.
the
(e) the geographic extent of effective commercialization of the trademark in Brazil, and in other countries, where applicable; (f) the recognition of a highly renowned trademark shall be requested by the trademark owner to means of promoting the trademark in Brazil and in other countries, where applicable;
According to BIPL Article 125 and Article 8 of Resolution 107/2013, the recognition of a trademark's high reputation status affords it special protection in all market segments (i.e. protection for non-similar goods and services) for a ten-year period. In practical terms, such recognition results in the potential denial of trademark applications and the nullity of previous trademark registrations involving similar trademarks. However, this special protection will cease or will no longer be guaranteed in cases of (i) extinction of the trademark's 14 registration; or (ii) revision or cancellation of the trademark's recognized high reputation status applied by any third party, according to Article 10 of Resolution 107/2013.
(g) the amount of investment in advertising of the trademark in the Brazilian media in the last five years; (h) the amount of product sales or service profits in the last five years; (i) the economic value of the trademark as an asset of the company; (j) the profile and number of people affected by the media through which the trademark owner advertises the trademark in Brazil; (k) the information providing evidence that the distinctive character of the trademark's reputation has been diluted or parasitically exploited by third parties;
III.
(l) the information providing identification of consumers/users with the trademark's values; and
A CONCISE CRITICAL ANALYSIS OF THE PROTECTION AND REGULATION OF HIGHLY RENOWNED TRADEMARKS IN BRAZIL
While Article 67 of the revoked Brazilian Intellectual Property Act of 1971 regulated the former 'marca notória', Article 125 of the Brazilian Intellectual Property Law of 1996 introduced the new legal concept of 'marcas de alto renome'. As already stated above, these represent two different types of special trademark protection. On the one hand, one could argue that BIPL Article 125 constitutes special trademark protection for dissimilar goods and
(m) the information providing the degree of consumer/user trust towards the trademark. The recognition of a highly renowned trademark shall be requested by the trademark owner to the BPTO through a specific petition with attached supporting documentation, as specified in Articles 3 and 4 of Resolution 107/2013, listed above. The requests are examined by a special commission using a specific application sheet and upon payment of a fee (which amounts to about US$17,000)12 during the term of registration. The special commission is composed of staff members from the BPTO's Trademark Department, who are selected by the president of the BPTO.
13
The BPTO's trademark online database with a list of all of the trademarks with highly renowned status that have been granted and that are still in force is available at: accessed 31 October 2014. There are also separate lists for FIFA's highly renowned trademarks, which were granted based on Article 3 of Law No. 12,663 of 5 June 2012 ('World Cup Law'); however, the effects of these recognitions are valid only until 31 December 2014. 14 According to BIPL Article 142, registration of the trademark shall be extinguished: (i) upon expiration of its term; (ii) upon the trademark owner's renunciation, either partially or in full, of the products or services associated with the trademark; (iii) upon forfeiture request by a third party; or (iv) upon non-compliance with the provisions of Article 217 (obligation to maintain a Brazilian attorney by persons domiciled abroad).
12
Ordinance No. 27 of 6 February 2014, of the Ministry of Development, Industry and Foreign Trade (Diário Oficial da União 7 February 2014, No. 27, Section 1, 66): electronic applications registered on the INPI's website will be charged at R$37,500.00, and requests on paper at R$41,300.00 (Brazilian Reals).
26
IPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ services as regulated in Article 67. On the other hand, the new protection regime is now much stronger and objective, as it is now largely based on clear legal requirements.
Although trademark owners held very high expectations regarding the BPTO's position and regulation in this regard, many class associations and intellectual property attorneys have heavily criticized its provisions. Previous BPTO Resolutions Nos. 110/2004, 121/2005, and 23/2013 - were not well received by the entities representing intellectual property officers and agents. Many aspects, including the time taken to recognize and declare the trademark's reputation (until then limited to an argument of defence in opposition and nullity action procedures before the BPTO), the term provided for submitting all of the necessary proof and documentation and the five-year protection period were considered too short. The lack of clarity as to whether the reputation of the trademark can be granted ex officio by the BPTO was criticized. The approval and publication by the BIPL of four resolutions in less than ten years demonstrate how difficult it was (and probably still is) to solve the problem of interpretation and implementation of BIPL Article 125 in practice.
One of the major difficulties is the implementation of BIPL Article 125. No further legal conditions are required besides registration and the consideration of high reputation status. In other words, special protection can be guaranteed for all registered signs, in all fields of activity, if they are considered to have a high reputation status in Brazil. Therefore, BIPL Article 125 does not provide the legal requirements for a sign to be considered a highly reputed trademark, nor does it define the relevant Brazilian authority (BPTO, Judiciary, or otherwise) responsible for investigating the conditions necessary for the granting of special legal protection requested by the trademark owner. It would be reasonable to suggest that BIPL Article 125 has opened up a 'Pandora's Box' for Brazilian trademark law and praxis. Given the lack of more specific legal requirements, the practical enforcement of BIPL Article 125 has been - since the very beginning - quite difficult, not only for trademark owners, but also for judges and BPTO trademark staff. In other words, BIPL Article 125 has brought with it a high level of legal uncertainty and chaos.
Indeed, it is difficult to comply with such a wide range of viewpoints as to what a highly reputed trademark is or should be, on the one hand, and to deal with differing interests and claims from trademark owners and their intellectual property 16 agents on the other hand, while striking a balance with public interest (e.g. government policies in the field of trademark law such as consumer and competition law). In Resolution No. 107/2013, as analysed above in Section II.B., the BPTO seems to have conceded defeat and recognized the previous resolution's imperfections, while taking into consideration the concerns of trademark owners and their agents. This introduced some substantial changes such as a separate initial procedure for the recognition of the trademark's high reputation status and the extension of the protection period from five to ten years.
Despite the fact that it was clear from the outset that more precise regulation of BIPL Article 125 was necessary, the Brazilian Government took too long to respond. The very first BPTO Resolution (No. 110/2004) came into force almost eight years after the publication of BIPL in 1996. Consequently, Brazilian trademark law has recently witnessed judicial battles for the recognition and regulation of trademark reputations. In addition to the considerable number of lawsuits filed before the federal courts for the judicial recognition of the high 15 reputation status of trademarks, the Brazilian PTO has made many attempts to regulate the implementation of BIPL Article 125.
IV.
POSSIBLE INTERNATIONAL INPUTS: SUPPORT FROM COMPARATIVE PRIVATE LAW
For decades, the special protection of highly renowned trademarks against misappropriation and interference in their distinctive character has constituted one of the basic components of any modern trademark law system. Deeper analysis in terms of comparative private law may identify many national trademark systems and international rules that regulate this particular situation in a better and 17 more effective manner than BIPL No. 9.279/1996.
15
Considering that BIPL Article 125 does not define the relevant authority in Brazil to recognize high reputation status of trademarks (BPTO, Judiciary, or other government entity), several trademark owners filed lawsuits in early 2000 requesting the special protection provided by BIPL Article 125. Many of these succeeded at that time, but now they are no longer in force (Marcelo MA Goyanes and Gustavo B Birenbaum, 'Marcas de alto renome e notoriamente conhecidas: cabimento de ação declaratória para a obtenção da proteção prevista na Lei No. 9.279/96' (2005) 75 Revista da ABPI 51; Gabriel F Leonardos and Rafael L Amaral, 'Marcas de alto renome, o artigo 16.3 do TRIPS e as ações declaratórias' (2005) 70 Revista da ABPI 57).
16
Some of these claims and concerns are summarized in Resolution No. 60 of 21 October 2004, of the Brazilian Intellectual Property Association (ABPI) accessed 31 October 2014. 17 See E Baiocchi (n 2) 441.
27
Enzo Baiocchi, Protection and Regulation of Highly Renowned Trademarks - A Brief Overview of Recent Developments in Brazilian Trademark Law _____________________________________________________________________________________ provision (trademark protection for all fields of activity, i.e. for non-similar goods and services). Considering the wide range of economic interests involved in this particular field of private law, changing the status quo will require both political will and a major undertaking.
In this regard, both the Brazilian Government and Parliament should learn from the experience gained by other countries and consider improving the wording of BIPL Article 125, particularly to include more precise and clear legal requirements to guarantee the legal certainty in this field of trademark law. In order to achieve this goal, some good examples of international provisions exist: Articles 4.4.a and 5.2 of EU Trademark Directive 2008/95/EC, former 89/104/EEC); Article 9.6 of the Protocol on Harmonization of Intellectual Property Norms (South Africa), and Article 2.g of Paraguayan Trademark Law, Law No. 1.294/1998), as well as WIPO Joint Recommendations and Resolutions concerning the protection of well-known trademarks, particularly WKM/CE/I/3, WIPO-doc. A/34/13, and WIPO-doc. 833(E), Article 4.1,b, No. i, ii, and iii. V.
This brief study shows that the protection of highly renowned trademarks in Brazil is quite different, not only from those adopted by other countries in Europe and South America, but also from Brazil's own trademark law tradition. The option of BIPL Article 125 to acquire objective and absolute protection (regardless of the possibility of confusion as to the origin of goods and services or damage to the trademark's reputation) was perhaps an audacious path for the Trademark Law of 1996 to take. However, instead of providing benefits, it has led to many concerns. Finally, it is important to highlight that beyond any discussion of changes to the current wording of BIPL Article 125, it is also necessary to clarify that this legal provision must always be interpreted and applied on a strict basis. A highly renowned trademark should only be protected in cases where both signs are identical, or at least very similar to each other, thus considering the possibility of confusion as to the origin of goods and services or even damage to a trademark's high reputation.
FINAL REMARKS AND CONCLUSION
Despite the enormous commitment of the BPTO to restore trademark owners' and attorneys' faith in applying for the special protection provided by BIPL Article 125 through administrative resolutions, there is still a high degree of legal uncertainty surrounding the effective protection of highly renowned trademarks in Brazil. BPTO Resolution No. 107/2013 has been welcomed, but fails to provide a permanent solution.
BIBLIOGRAPHY ABPI (Brazilian Intellectual Property Association) Resolution No. 60, of 21 October 2004 accessed 31 October 2014
As long as there are no clear and precise legal requirements anchored firmly in BIPL Article 125, this special kind of trademark protection will remain tied to restrictions within the current political and economic climate. Resolutions are changing on a constant basis (four have already been published) due to pressure from lobbying groups and other political interests, or due to the inadequacy and inconsistencies associated with the substantial number of legal conditions and proof required for recognition of high reputation status.
AIPPI Question Q234 ('Relevant public for determining the degree of recognition of famous marks, well-known marks and marks with reputation'), Answer of Brazilian Group 19 April 2013 accessed 31 October 2014 Baiocchi E, 'A proteção à marca notoriamente conhecida fora do campo de semelhança entre produtos e serviços: a (não) aplicação do art. 16.3 do TRIPS no Brasil' (2009) 102 Revista da ABPI 3
Therefore, instead of regulating the interpretation and implementation of BIPL Article 125 through administrative resolutions, legislative changes are 18 necessary. As demonstrated above, the current wording of BIPL Article 125 encompasses a general clause and foresees absolute protection, which leads not only to legal uncertainty, but also to competition issues (market restraint), especially when considering the practical consequences of this legal
'A proteção à marca de alto renome no Brasil' in D B Barbosa and K Grau-Kuntz (eds), Ensaios sobre o direito imaterial – estudos dedicados a Newton Silveira (Lumen Juris 2009) 'Considerazioni sulla tutela allargata del marchio notoriamente conosciuto ai sensi dell`art. 16.3 TRIPS: uno studio dalla prospettiva del diritto dei marchi brasiliano' (2011) 3 RDI 130
18
Bill of Law No. 4.890/2009, which encompasses some legal requirements that are already regulated in BPTO Resolution No. 107/2013, is still undergoing analysis by the Brazilian Congress.
28
IPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ 'Der Schutz Bekannter Marken unter besonderer Berücksichtigung der zivilrechtlichen Sanktionen – eine Rechtsvergleichung zwischen dem deutscheuropäischen und dem brasilianischsüdamerikanischen Markenrecht' (Carl Heymanns 2012) Barbosa DB, Proteção das Marcas: uma perspectiva semiológica (Lumen Juris 2008) Goyanes MMA and Birenbaum GB, 'Marcas de alto renome e notoriamente conhecidas: cabimento de ação declaratória para a obtenção da proteção prevista na Lei No. 9.279/96' (2005) 75 Revista da ABPI 51 Leonardos GF and Amaral RL, 'Marcas de alto renome, o artigo 16.3 do TRIPS e as ações declaratórias' (2005) 70 Revista da ABPI 57 Levigard DA and Silva NF, 'A proteção das marcas de alto renome no Brasil' (2007) 86 Revista da ABPI 41 Morgado MCR, Marcas de Alto Renome: abordagem conforme a legislação brasileira (Juruá 2013) Moro MCF, Direito de Marcas: abordagem das marcas notórias na Lei 9.279/1996 e nos acordos internacionais (Revista dos Tribunais 2003) Resolution of the President of the Brazilian Patent Office, No. 107 of 19 August 2013 accessed 31 October 2014 o
Rodrigues MAC, 'Parecer INPI/PROC/DICONS n 054/2002, de 09/10/2002' (2004) 72 Revista da ABPI 3 Soares JCT, Marcas notoriamente conhecidas – marcas de alto renome vs. diluição (Lumen Juris 2010) _______________
29
provides a historical overview of the third revision, and discusses the revised contents and potential problems in the enforcement of the Third Amendment. It also puts forward proposals for the effective protection of the exclusive rights of trademarks owned by foreign enterprises.
4 THE THIRD REVISION OF CHINESE TRADEMARK LAW AND ITS IMPACT ON FOREIGN COMPANIES Dr Zhang Weijun∗
II. ABSTRACT
The initial Trademark Law of the People's Republic of China3 is the first legislation on intellectual property rights since China launched its economic reforms and opening-up policy in the 1980s. On 1 March 1983, legal protection for the exclusive right to the use of a trademark was initiated in China.4 Thereafter, China was a signatory to the Paris Convention for the Protection of Industrial Property in 1985 and the Madrid Agreement Concerning the International Registration of Marks in 1989. In order to make it consistent with international practices and to meet the needs of the development of the market 5 economy, in 1993 the Trademark Law was amended 6 for the first time. In 2001, the Trademark Law7 was again significantly revised with a view to fulfilling the requirements of accession to the World Trade
Comprehensive modifications of the enforcement of Chinese trademark law have been made in the recent third revision of the People's Republic of China's Trademark Law. This revision not only provides more effective protection of the exclusive right to use a trademark, but also represents a significant improvement of the Chinese legal trademark system, establishing a fair and competitive market order that will contribute to a more inviting legal environment for foreign companies. Keywords: Chinese Trademark Law, trademark, badfaith trademark registration, trademark infringement, foreign company I.
BACKGROUND, PROCESS AND FEATURES OF THE THIRD AMENDMENT
INTRODUCTION
On 30 August 2013, the Decision on Revising the 1 Trademark Law of the People's Republic of China (the 'Decision on the Third Revision') was adopted at the Fourth Meeting of the Standing Committee of the Twelfth National People's Congress. The Third Amendment of Trademark Law of the People's Republic of China (the 'Third Amendment')2 will come into effect on 1 May 2014. This is another substantive revision of China's Trademark Law in the wake of the Second Amendment of 2001. This article
3
Shang biaofa [Trademark Law 商标法] (adopted at the 24th Meeting of the Standing Committee of the Fifth National People's Congress, 23 August 1982, effective 1 March 1983), 1982 Standing Comm. Nat'l People's Cong. Gaz. 3 (P.R.C.). Available at: (last visited 15 October 2013). 4 RenZhonglin [任中林], Guan yuZhonghuaRenminGongheguo Shang biaofaxiuzheng an cao an de shuoming [Explanation on the Draft of the Trademark Law of the People's Republic of China. 关于《中华人民共和国商标法》（草案）的说明], 1982 Standing Committee of the National People's Congress Gaz. 3 (People's Republic of China). Available at: (accessed 15 October 2013). 5 The First Amendment of the Trademark Law of the People's Republic of China (adopted at the 30th meeting of the Standing Committee of the Seventh National People's Congress, 22 February 1993), the English version is available at: (accessed 15 October 2013). 6 Liu Minxue [刘敏学], Guan yuZhonghuaRenminGongheguo Shang biaofaxiuzheng an cao an de shuoming [Explanation on the Draft of the Trademark Law of the People's Republic of China. 关于《中华人民共和国商标法》（草案）的说明], 1993 Standing Committee of the National People's Congress Gaz. 1 (People's Republic of China). Available at: (accessed 15 October 2013). 7 The Second Amendment of the Trademark Law of the People's Republic of China (adopted at the 24th meeting of the Standing Committee of the Ninth National People's Congress, 27 October 2001) is the existing Trademark Law, the English version is available at: (accessed 15 October 2013).
∗
Dr Zhang Weijun (China) Professor, Tongji University, Shanghai, China; Bachelor's Degree of Law from Peking University; Master's Degree of Law from Shanghai University; and Doctor's Degree of Intellectual Property Management from Tongji University. Dr Zhang was a visiting scholar at the Max Plank Institute for Intellectual Property law, Competition Law and Tax Law from January 2006 to February 2007. He is the author of the book, Study on Abuse of the Legal Regulation of Intellectual Property Rights, (published by Intellectual Property Press 2008) and has translated the book Enforcement of IPRs in Dutch, English and German Civil Procedure (published by the Commercial Press 2014). He is also the co-editor of the book series Intellectual Property and Competition Law Review published in 2012 and 2014. 1
Decision of the Standing Committee of the National People's Congress on Revising the Trademark Law of the People's Republic of China (promulgated by Order No. 6 of the President of the People's Republic of China, 30 August 2013, effective 1 May 2014), translated in Westlaw China (accessed 15 October 2013). 2 The Third Amendment of Trademark Law of the People's Republic of China (amended according to the Decision on Revising the Trademark Law of the People's Republic of China, effective 1 May 2014), the English version is available in Westlaw China (accessed 15 October 2013).
31
Zhang Weijun, The Third Revision of Chinese Trademark Law and its Impact on Foreign Companies _____________________________________________________________________________________ Organization (WTO) and further strengthening its trademark protection.8
on 27 June 2013, the second review of the Amendment Draft was undertaken, with revision of several points based on feedback from the public on 14 the previous version. After the third review by the Standing Committee of the National People's Congress, the Decision on Revising the Trademark Law of the China was finally adopted and promulgated on 30 August 2013.15
Considering that the Second Amendment of the Trademark Law was to a great extent merely filling the gap toward the Trade-Related Aspects of Intellectual Property Rights Agreement (the 'TRIPS Agreement'), some practical problems with respect to trademark registration and protection in China were still left unsolved, such as the inconvenience of the application procedure for trademark registration, the time-consuming and complicated opposition procedure, difficulties in preventing bad-faith registration, bad-faith opposition and other 9 unfaithful actions. Thus, in 2003, the State Administration for Industry and Commerce of China (the 'SAIC') officially launched the third revision of the Trademark Law. After more than ten modifications, the initial Amendment Draft of the Trademark Law was finalized by SAIC and submitted to the State Council for approval on 18 November 2009.10 On 1 September 2011, the Legislative Affairs Office of the State Council circulated the Amendment Draft of the Trademark Law to seek 11 public opinion , upon which the Amendment of the Trademark Law (the 'Draft Amendment') was based and passed after discussion at the executive meetings of the State Council on 31 October 2012. On 24 December 2012, the Standing Committee of the National People's Congress undertook the first review of said Amendment Draft12, which was circulated thereafter again for public opinion,13 and
After nearly ten years of intense debate repeated discussion, the third revision of Trademark Law was concluded. Overall, modification of the Trademark law bears following features: •
and the this the
First, the process of this revision is transparent and open. It is unusual in the legislative history of China that the Amendment Draft was published for comments not only by the State Council, but also by the National People's Congress. Public opinions have been taken into consideration to a great extent during this revision. For instance, the rule that forbids the use of the wording of 'well-known trademark' in the advertising and packaging of goods was adopted into the 16 revision at the last minute , as suggested by the public, especially with the strong support by the trademark law professionals.17 This regulation is meant to
Congress for Public Opinion on 28 December 2012, the English version is available in Westlaw China (accessed 15 October 2013). 14 See Shang biaofaxiugaijinruershen [The revision of the Trademark Law is undergoing its second review 商标法修改进入二审], Ren min ribao [ People's Daily 人民日报], (28 June 2013), available at: (accessed 15 October 2013). 15 Id. supra note 1. 16 After the first review of the Trademark Law draft by the Standing committee of the National People's Congress, the following proposals have been put forwarded by some members of the NPC Standing Committee, local governments, relevant departments and enterprises: (1) the connotation of the well known trademark should be further clarified; (2) the provisions on the authorities in charge of recognizing the well known status and how to recognize the status should be specified according to the 'individual judgement, passive protection' principle; and (3) taking the well known trademark as a means of advertisement should be explicitly forbidden, so as to prevent the consumer from being misled. These proposals are aimed at the abnormal use of the well known trademark as an honorary title, which is pervasive in China and has lead to some problems in practice. 17 For instance, Dong Baolin [董葆霖]，Guanyu Shang biaofa di shi san tiao di shisitiaoxiugai de yijian [Opinion on modification of Articles 13 and 14 of the Trademark Law 关于商标法第十三条、第十四条修改意见], available at: (accessed 15 October 2013). Mr Dong is the chief of the
8
Wang Zhongfu [王众孚], Guan yuZhonghuaRenminGongheguo Shang biaofaxiuzheng an cao an de shuoming [Explanation of the Draft of the Trademark Law of the People's Republic of China. 关于《中华人民共和国商标法》（草案）的说明], 2001 Standing Committee of the National People's Congress Gaz. 7. Available at: 9 See Li Jibin [李吉斌] (24 December 2012), Shang biaofaxiuzheng an cao an shou ci beitiqingshenyi [The draft of the Trademark Law amendment is submitted for review for the first time 商标法修正案草案首次被提请审议], available at: 10 The unpublished Amendment Draft by SAIC for Approval of the State Council contains a total of 79 articles. The Explanation on the Amendment Draft for Approval of the State Council by SAIC is also unpublished. (18 November 2009). 11 The Amendment Draft for Public Comments published by the Legislative Affairs Office of the State Council on 1 September 2011 contains a total of 75 articles, available at: 12 Idem supra note 9. 13 The Amendment of the Trademark Law of the People's Republic of China (Draft) and the Explanation of the Amendment of the Trademark Law of the People's Republic of China (Draft), announced by the National People's
32
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ address the phenomenon in China that the wording of 'well-known trademark' is often misused as an honour for goods, or a means of advertising in practice, and therefore deviates from the essential purpose of the institution. •
The Second Amendment of the Trademark Law of 2001 has sought to prohibit trademark applications made in bad faith, such as providing protection for well-known trademarks by preventing others from applying for registration or using another's well20 known trademark. According to Article 6 of the Paris Convention, the agent or representative of the person who is the proprietor of a trademark is forbidden to apply for the registration of the mark in his own name or to use the mark, without such proprietor's authorization.21 Additionally, no applicant for trademark application may infringe upon another person's existing prior rights, nor may he, by illegitimate means, rush to register a trademark that is already in use by another person 22 Nonetheless, and has certain influence. applications that are made in violation of the good faith principle and trademark registrations by illegitimate means still abound. Thus, during the third revision of the Trademark Law, preventing violations of the good-faith principal was regarded as essential23, and was one of the bases for further improvement.
Second, this revision is an active amendment based on the actual, domestic needs of China. As mentioned before, the First Amendment of the Trademark Law in 1993 and the Second Amendment in 2001 largely contributed to China's accession to the WTO and the international pressure, especially from developed countries like the United States, for the purpose of passively meeting the requirements of international agreements such as the Paris Convention and the TRIPS Agreement. However, rather than focus on international treaties that China has joined, the Third Amendment focusses further on China' actual domestic needs.18
(i)
Finally, this revision seeks to resolve practical enforcement of trademark protection, in particular by making the trademark registration process more convenient for the applicant, regulating the application and use of trademarks, and safeguarding the market order of fair competition through strengthening protection of the exclusive right to the use of a trademark and other legitimate interests of 19 the trademark owner. III.
THE CONTENTS AND CONTROVERSY OF THE THIRD AMENDMENT
A.
PREVENTING BAD-FAITH TRADEMARK REGISTRATION AND PROTECTING PRIOR USE OF THE TRADEMARK
INCORPORATION PRINCIPLE
OF
THE
GOOD
FAITH
Article 7 of the new Trademark Law clearly defines the principle of good faith as a dominating principle in the application for trademark registration and the use of trademarks, namely, that this principle shall be observed in the application for trademark registration and in the use of trademarks.24 This serves to deter preemptive registrations in bad faith of trademarks, which are already in use by others. (ii)
STRENGTHENED PROTECTION KNOWN TRADEMARKS
OF
WELL
During the Chinese enforcement of the protection of well-known trademarks, the understanding of the well-known trademark shifted away from being understood as an honorary title of the goods, and the requirements to earn the title were enhanced. This, in turn, eased the preemptive registration of others' well-known trademark by illegitimate means, as it became more difficult to claim protection of well-known trademarks. For instance, a Chinese company in Jiangsu, DER International Home Furnishing Co. Ltd, applied for a 'BMW' trademark for class 19 goods of the classification of the goods on floorboards in 2003. The German BMW Co. Ltd.
As China's trademark registration system originally adopted the 'first to file' principle, the interests of prior rights holders have been more or less overlooked. Consequently, it is very common in trademark disputes where companies have rushed to register a trademark that is already in use by others, and some trademark applications infringe upon others' existing prior rights (e.g. trademark applications using the names of athletes like Yao Ming or Michael Jordan etc.). Such unfair competition behaviours are harmful to marketoriented values and should therefore be prohibited.
20
Article 13 of the existing Trademark Law. Article 15 of the existing Trademark Law. 22 Article 31 of the existing Trademark Law. 23 Id. supra note 13. 24 Article 7 paragraph 1 of the new Trademark Law provides: The principle of good faith shall be observed in the application for trademark registration and in the use of trademarks. 21
expert committee of China's Trademark Association and former director of the Legal Affairs Department of China's Trademark Office. 18 Idem supra note 6. 19 Idem.
33
Zhang Weijun, The Third Revision of Chinese Trademark Law and its Impact on Foreign Companies _____________________________________________________________________________________ objected to the trademark registration on grounds of well-known trademark. However since it is the Chinese translation of 'BMW' -- '宝马' [Bao Ma]and not the 'BMW' itself (which is well known by the public in China), the Trademark Office found the objection unjustified. Thereafter, the German BMW Company requested a review. The review decision was finally made by the TRAB in October 2012 that the 'BMW' was a well-known trademark on goods in class 12 of the classification of automobiles and the registration application for the opposed trademark was rejected.25 Figure 4.1: The trademark 'BMW' filed by DER for registration in China
Furthermore, a well-known trademark shall only be recognized 'upon request by the party concerned … as a fact that needs to be ascertained in the handling of a 28 trademark-related case'. The recognition of a well-known trademark 'has only effect in the specific dispute where a fact needs to be ascertained in the handling of the related case'.29 Thus, it shall not be deemed as granting an honorary title on goods or services, and its recognition requirements shall not be artificially or improperly enhanced.
•
Moreover, manufacturers and business operators shall neither indicate the words 'well-known trademark' on goods and the packaging or containers of goods, nor shall they use the same for advertising, exhibition, or other commercial activities.30 This provision intends to eliminate certain requests by companies for recognition of well-known trademarks that are based on improper purposes and return the protection of well-known trademarks to its true meaning by identifying a well-known trademark on the actual needs of protection, without other artificial barriers.
However, it is doubtful whether such revisions will actually be able to change ineffective protection of well-known trademarks in China. While Article 13 paragraph 1 of the Third Amendment expressly defines a 'well-known trademark' as a trademark that is well known by the relevant public, the TRIPS Agreement provides that, in determining whether a trademark is well known, only 'the knowledge of the trademark in the relevant sector of the public' 31 matters. Article 14 of the new Trademark Law still preserves all the factors provided in the existing Trademark Law that need to be taken into consideration in determining a well-known trademark, such as the duration of time in which the trademark has been in use, the duration and extent of its advertising, and the geographical areas the advertising has covered. For this reason, 'the recognition threshold is still too high to cross and the 32 limitations remain too many to conquer' and in the end it remains difficult to stop illegitimate actions of preemptive registration of the unregistered
To achieve the basic functions of the institution of well-known trademark (i.e. to prohibit others from registering and using the trademark which is identical with or similar to the well-known 26 trademark) , the Third Amendment of the Trademark Law makes the following revisions and improvements: •
•
First, the only precondition to request protection of a trademark as a well-known trademark is that 'the trademark shall be 27 well known by the relevant public' , that is to say, any other elements need to be taken into account when determining whether a trademark is a well-known trademark or not.
25
See News on the CCPIT Patent and Trademark Law Office website, available at: (accessed 15 October 2013). 26 Id. supra note 13. 27 Article 13 paragraph 1 of the new Trademark Law provides: A holder of a trademark that is well known by the relevant public may request protection of the trademark as a well known trademark in accordance with this Law if the holder is of the opinion that any rights have been infringed upon. (emphasis added).
28
Article 14 paragraph 1 of the new Trademark Law. Id. supra note 13. 30 Article 14 paragraph 5 of the new Trademark Law. 31 Article 16 paragraph 2 of the TRIPS Agreement. 32 Xinshangbiaofaliangdianjie du [Analysis of highlights of the new Trademark Law 新商标法亮点解读]，Fazhiribao [Legal Daily 法制日报] (3 September 2013), available at: (accessed 15 October 2013). 29
34
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ trademark which is, in fact, well known by the relevant public.
Higher People's Court (Decision No. [(2006) Xing ZhongZi No. 9] ) defined the wording 'agent', pursuant to Article 15 of the contemporary Trademark law, only as 'trademark agent' and dismissed the review decision of the TRAB and the ruling of the court of first impression. Thereafter, the Supreme People's Court brought up the case directly and held in its decision (Decision No.:[(2007) Xing Ti Zi No.]) that in conforming with the authoritative explanation to the Paris Convention, the common practice in the member states, and the usual enforcement of relevant administrative laws of China, the terms 'agent or representative' in Article septies of the Paris Convention should be defined 6 broadly as agents or representatives who are in special sales relationships with the proprietor of the trademark, including exclusive distributors and general agents. In considering the legislative history, the legislative intent of the Trademark Law, and the provisions of the Paris Convention and judicial explanations, the Supreme People's Court of China held that the term 'agent' of Article 15 of the Trademark Law refers broadly, not only to the trademark agents who are entrusted by applicants for trademark registration to deal with trademark affairs within the scope of their authorization, but also to the agencies who are in special sales representative relationships with the proprietor of the trademark, including exclusive sellers and 37 general agencies.
(iii) PROHIBITION OF PREEMPTIVE REGISTRATION OF THE TRADEMARK IN PRIOR USE BY BUSINESS PARTNERS Considering the reality of increasing bad-faith registrations of others' trademarks in China and the requirement of Article 6 of the Paris Convention, the Second Amendment of the Trademark Law of 2001 provided that, where an agent or representative, without authorization of the client seeks to register in its own name the client's trademark and the client objects, the trademark shall not be registered and its use shall be prohibited.33 As the wording of 'agent or representative' was simply copied from the Paris Convention without sufficiently considering the meaning of the terms in the context of the Chinese legal system, the explanation of the terms 'agent or representative' was rather debatable after the announcement of the Second Amendment of the Trademark Law.34 Some believe that 'agent' stands for trademark agents who are entrusted to deal with application affairs for trademark registration and 'representative' stands for the person who represents the enterprise to deal with trademark 35 registration applications and other matters. While some understand 'agent or representative' as the subjects that include not only the entities mentioned above, but also the business agencies and representatives for the company such as distributors or officers36, others consider it as incompatible with the Paris Convention to limit 'agent' merely to 'trademark agents' and consider that the 'agent or representative', pursuant to the Paris Convention, should refer to all agencies in other countries that are entitled to sell the products in their countries in which the registered trademark of the proprietor is used.
Although agents in special sales relationships with the proprietor of the trademark were explicitly included in the definition of 'agent or representative' pursuant to Article 15 of the existing Trademark Law, there are still certain malicious registrations by parties who do not have a sales representative relationship, yet share other business cooperative relationships with the proprietor of trademark. Thus, the Third Amendment adds supplementary provisions to Article 15 of the existing Trademark Law:
Such controversy has a direct influence on legal practice. On 3 April 2006, the decision of the Beijing
an application for registering a trademark for the same or similar goods shall not be approved if the trademark under application is identical with or similar to an unregistered trademark already used by another party; the applicant clearly knows the existence of the trademark of such another party due to contractual, business or other relationships with the latter, other than
33
Article 15 of the existing Trademark Law. Wu Xinhua [吴新华], Shang biao ping shenyushijian de jian nan dui jie [Difficult adapting trademark examinations to practice 商标评审与实践的艰难对接], Zhongguozhishichanquanbao [China Intellectual Property News], 28 January 2007, available at: (accessed 15 October 2013). 35 Xinshangbiaofajieshiyuzaozuoshiwu [Interpretation and practice of new Trademark Law 新商标法释解与操作实务], at 44-48 (Hu Jihua, et al ed. [扈纪华等编]，Zhongguoshang ye chu ban she, 2001). 36 ZhonghuaRenminGongheguoshangbiaofashiyi [Interpretation of the Trademark Law of the People's Republic of China 中华人民共和国商标法释义], at 42-44 (XuYulin, et al.ed [徐玉麟等编]，Zhongguofazhichu ban she, 2002). 34
37
Ma Dongxiao [马东晓],Yi ci buche di di fan zheng -- jian ping shangbiaofa di shiwutiao'dai li ren'degainian [A not complete correction -- comment on the concept of 'agent' in Article 15 of the Trademark Law 一次不彻底地反正—— 兼评商标法第十五条'代理人'的概念]，available at: (accessed 15 October 2013).
35
Zhang Weijun, The Third Revision of Chinese Trademark Law and its Impact on Foreign Companies _____________________________________________________________________________________ those prescribed in the preceding paragraph; and such another party raises objections to the applicant's trademark registration application'.38
to register a trademark that is already in use by another person and has certain influence.'40 The Third Amendment keeps this provision (as Article 32) and adds Article 15 paragraph 2 prohibiting preemptive registration of a trademark by an applicant who knows clearly that the said trademark is already used by his business partners.
In this way, the malicious preemptive registrations for the trademark of clients or business partners by the relevant parties could be effectively prohibited for those who are trademark agents, representatives entrusted with dealing with trademark registration affairs, goods distributor agencies and any other parties who are in a commercial cooperative relationship with the owner of the trademark.
The determination of 'illegitimate means' lies largely in the subjective status of the applicant. However, it is always difficult in practice to prove that the trademark applicant had or should have had the knowledge of the prior use by a prior user and it is therefore difficult to stop such behaviour by requesting the TRAB to declare the trademark invalid. Consequently, it is obviously unfair and improper if the holder of the exclusive right to use the trademark may prohibit prior users from continuing to use the trademark, which is now in use by him.
It is worth noting that Article 15 paragraph 2 of the new Trademark Law adds two more requirements: first, the applicant for trademark registration must clearly know the existence of the trademark of another party due to contractual, business or other relationships with the latter; second, the unregistered trademark must 'have already been used' by said other party. It is still unclear whether the 'prior use' is restricted to the area within China or not.
Accordingly, the Third Amendment of the Trademark Law takes the position in Article 59 paragraph 3: where, before a trademark registrant applies for registration of the relevant trademark, another party has used ahead of the trademark registrant a trademark that is of certain influence and is identical with or similar to the registered trademark on the same or similar goods, the holder of the exclusive right to use the registered trademark shall have no right to prohibit the said party from continuing to use the trademark within the original scope of use, but may require the latter to add suitable logos for distinguishing purposes.
It remains an open question as to whether a foreign company may raise an objection to an application for trademark registration, whose trademark is only used outside China and the goods for which the trademark is used have not been sold on the Chinese market or promoted commercially. It remains to be seen which provision is applicable in cases where a sales agent improperly registers the trademark owned by his principal.39 In accordance with the decision of the Supreme People's Court, the sales agencies are clearly covered by Article 15 paragraph 1 of the Trademark Law. However the newly added provision of Article 15 paragraph 2 seems to touch upon the nature of the relationship between sales agencies and principals. (iv)
The 'continue to use' right is restricted according to this provision within the original scope of prior use, but which at the same time could be understood in practice differently. The following issues still need to be clarified in the enforcement of the Trademark Law by implementing rules or judicial practice: above all, how to define the geographical area of the use (especially with respect to subsidiaries within the original geographical area of the use). Furthermore, are there any limitations to the quantity and scale of the products and is it possible to expand the scale of operation within the original geographical area of the use? Additionally, is it beyond the original scope of use where the goods are circulated in the market outside the original geographical area of the use because of an operator other than prior user?
PRIOR USE RIGHTS DEFENCE
Although the Chinese Trademark Law observes the 'first to file' principle for trademark registration applications, an overemphasis of this principle would promote the unfaithful application for trademark registrations. Therefore, the existing Trademark Law states: No applicant for trademark application may infringe upon another person's existing prior rights, nor may he, by illegitimate means, rush
38
Article 15 paragraph 2 of the new Trademark Law. Article 15 paragraph 1 or Article 15 paragraph 2 of the Trademark Law. 39
40
36
Article 31 of the existing Trademark Law.
WIPO-WTO Colloquium Papers, 2014 _____________________________________________________________________________________ (v)
TRADEMARK AGENCIES' ENHANCED DUTY OF GOOD FAITH
prevent such preemptive registration more effectively, Article 19 paragraph 3 of the new Trademark Law adds:
A trademark agency is a profession in which trademark representative organizations provide trademark-related agency services based on legal knowledge and experience. The quality of the service and the standards of professional morality concern both the interests of the principal and the trademark registration application, as well as the quality and effectiveness of the Trademark Office. Therefore, the regulations regarding trademark agency have been strengthened by this trademark law revision. For one thing, the interests of principals are protected. In addition to the regulation pursuant to Article 15 paragraph 1 of the existing Trademark Law mentioned above, prohibiting the agent and representative from registering in his own name the trademark of the principal without authorization, Article 19 paragraph 1 of the new Trademark Law states.
A trademark agency shall not accept the entrustment of a principal if it knows or should have known that the trademark entrusted by the principal for registration application falls under any of the circumstances prescribed by Article 15 and Article 32 of this Law. By violating this rule, the trademark agency might be ordered to make a correction, be given a warning or even be subject to a fine or other administrative 42 punishments. However, this rule demands, in essence, that the trademark agencies carry the burden of examining whether the entrustment of their principals is a preemptive registration in bad faith, which in turn subjects the trademark agency to potentially heightened liabilities. Furthermore, it is not easy to determine whether the trademark agency knows or should have known the circumstances of the subjective stand of the principals. Hence, the feasibility of this rule in practice is still under observation.
Trademark agencies shall observe the principle of good faith, apply for trademark registration or handle other trademark-related matters according to the entrustment of principals, and keep confidential the principals' trade secrets that come to their knowledge during the agency process.
B.
In addition, Article 19 paragraph 4 of the Trademark Law states:
REINFORCING THE ENFORCEMENT OF THE EXCLUSIVE RIGHT TO USE THE REGISTERED TRADEMARK
On 10 November 2001, the WTO Fourth Ministerial Conference approved China's accession to the WTO, which indicated that the Chinese intellectual property legislation had, in principle, complied with the minimum requirements of the TRIPS Agreement, as well as other pertinent international conventions. Even so, the effective enforcement of these intellectual property legislations in China where, as a developing country, piracy and counterfeiting are pervasive, has always been a challenging problem.43 For this reason, intensifying efforts to crack down on counterfeits is a crucial task in the third revision of the Trademark Law.44 In doing so, the adopted Third Amendment of Trademark Law has improved the remedies for trademark infringement in the following aspects:
A trademark agency shall not apply for registration of trademarks other than the trademark for its agency services. Violation of this rule subjects the trademark agency to administrative penalties.41 For another, the preemptive trademark registration for the principals by illegitimate means should be prohibited. As mentioned above, both Articles 15 and 32 of the new Trademark Law provide prohibition against preemptive registration of a trademark that is already in use by others. To 41
Article 68 paragraph1 of the new Trademark Law provides: A trademark agency that commits any of the following shall be ordered to make correction within the prescribed time period by the relevant administration for industry and commerce, be given a warning, and be subject to a fine of not less than CNY 10,000 but not more than CNY 100,000; its primary person-incharge subject to direct liabilities and other personnel subject to direct liabilities shall be given a warning an
